As the economic ramifications of COVID-19 become clearer, RIPEC brings you a concise update on the key public policy issues impacting Rhode Island

RIPEC on the COVID-19 Pandemic

• RIPEC’s President and CEO Michael DiBiase laid out the budgetary challenges facing state policymakers and offered words of advice in “Covid-19 and Public Finances in Rhode Island,” the second in a three-part panel discussion on Pandemic Economics presented by Bryant University and the Rhode Island Foundation
  • Boston Globe, “The clash between pandemic and public finances in Rhode Island”
  • WPRI 12, “Nesi’s Notes: May 30”

• In the second of a series of reports on how COVID-19 is impacting Rhode Island’s economy and finances, RIPEC found that the state’s unemployment insurance trust fund will likely become insolvent by the end of September, resulting in a significant increase in future unemployment insurance taxes. The report, “The Impacts of the COVID-19 Crisis on Rhode Island’s Unemployment and Temporary Disability Insurance Programs,” analyzes the fiscal stability of the state’s unemployment and temporary disability insurance programs.
  • Providence Journal, “Report: R.I. unemployment fund will run dry by Sept., drained by virus-fueled joblessness”
  • Providence Business News, “RIPEC: State unemployment trust may run out by Sept., resulting in raised business taxes”

• April jobs numbers for Rhode Island show a sharp decline, but the impact of the pandemic is uneven among Ocean State industries, according to the Rhode Island Current Economic Indicator (CEI) Briefing for Q1 2020, jointly released by The Center for Global and Regional Economic Studies at Bryant University and RIPEC. While the CEI Briefing typically uses only quarterly data, this issue also analyzed April jobs numbers to assess the impact of COVID-19 on the Rhode Island economy. 
  • Providence Business News, “Report: R.I. Q1 GDP projected to have contracted at 4.3% annualized rate”

Inside Insights

• The Rhode Island Commerce Corporation has floated the idea of providing state-sponsored financial assistance to small businesses amid the economic pressures of the pandemic and Lt. Governor Dan McKee has likewise asked the state to create a grant and loan program for small businesses with federal CARES Act dollars. The U.S. Chamber of Commerce Foundation has compiled a list of states that have already taken this action.

• An 11 percent decline in state revenues for fiscal year (FY) 2021 was projected during Rhode Island’s Revenue Estimating Conference in May, making the Ocean State one of six states to estimate a revenue decline between 11 and 15 percent. The National Council of State Legislators is tracking revised state revenue projections, and so far, nine states have projected declines under 10 percent and seven states have projected declines exceeding 15 percent for FY 2021.

What to Look for in June

• The Senate and House Finance Committees resumed hearings in mid-May, but with FY 2020 expiring on June 30, it’s unclear whether legislators will be able to reach an agreement over what will likely be a very challenging budget for FY 2021, or solve for the gaping hole in the current year (FY 2020) budget. If policymakers cannot agree by June 30, expenditures will continue under the same spending plan as in FY 2020, though it is anticipated that available state revenues will be far lower in FY 2021.

• The state entered Phase II of the governor’s three-phase plan for reopening Rhode Island on June 1, which means the wheels are in motion for Phase III.