With Governor McKee taking over, budget season looming, and the economic fallout of the pandemic persisting, RIPEC brings you a brief update on the major public policy issues impacting the Ocean State.
RIPEC on Public Policy
- RIPEC’s report on the seven ballot initiatives subsequently approved by Rhode Island voters on March 2 found that the state could afford the $400 million in borrowing under consideration. The report did not draw conclusions about the merits of the individual bond referenda but analyzed each in terms of return on investment, consistency with long-term state debt obligations, alignment with state policy goals, and the opportunity costs if investments were not approved.
- Providence Business News, “RIPEC supports borrowing in upcoming bond referenda”
- Providence Journal, “Political Scene: Special election asks RI voters to spend $400M on public projects”
- The Public’s Radio, “TGIF: Ian Donnis’ politics/media roundup for February 19, 2021”
- Shortly before Governor Raimondo was confirmed as President Biden’s commerce secretary, RIPEC’s President and CEO Michael DiBiase spoke to the Providence Journal about some of the biggest issues incoming Governor McKee is facing: the COVID-19 response, the state budget’s structural gap, transportation infrastructure—including a proposed transit hub in Providence—and the proposed merger between Lifespan, Care New England, and Brown.
- Michael DiBiase weighed in on the state of Rhode Island’s structural deficit, noting that the $513.7 million budget deficit for Fiscal Year (FY) 2022 that RIPEC projected in January will no longer be operative when Congress passes a new COVID relief bill. “The challenge for policymakers will be to use this one-time funding for strategic one-time investments and avoid adding to our structural problem of spending more than we take in,” he wrote.
- Researchers at the Urban-Brookings Tax Policy Center recently found that the pandemic’s impact on state revenues has varied greatly, from a 42.5 percent decline in Alaska to a 10.4 percent increase in Idaho. Despite its reliance on the heavily impacted hospitality and tourism sectors, Rhode Island was one of 22 states to see revenues increase (by 0.8 percent) between April and December of 2020, as compared to the same period in 2019.
- Compared to enacted revenues, the latest FY 2021 revenue numbers from the Rhode Island Department of Revenue show a 3.7 percent increase in total revenues through January, including a 4.0 percent increase in personal income taxes and a 3.4 percent increase in sales and use taxes.
What to Look for in March
- Governor McKee may have just been sworn in this week, but his first major deadline—the FY 2022 budget proposal—is due next week, on March 11.
- Rhode Island leaders are anticipating $1.7 billion ($1.1 billion to state government and $600 million to local governments) in additional federal COVID relief as part of the $1.9 trillion American Rescue Plan Act moving through Congress.
- RIPEC will release a redesigned edition of its “How Rhode Island Compares” series, placing Rhode Island’s revenues and expenditures in national, regional, and historical context. Also look for the first in a series of interactive datasets on RIPEC’s website as part of this report.