Rhode Island Public Expenditure Council

• RIPEC released a policy brief analyzing Rhode Island’s business tax climate and assessing potential tax law changes currently under consideration by the General Assembly. Finding that the Ocean State improved in its ranking on the Tax Foundation’s Business Tax Climate Index for the first time in several years but that it still ranks in the bottom ten states (41^st highest), RIPEC highlighted that some current year proposals would improve the state’s standing while others would significantly worsen its position.
  • Boston Globe, “Rhode Island surpasses neighbors in business tax rankings as Massachusetts plummets following ‘millionaire’s tax’”
  • Providence Business News, “RIPEC: Legislative proposals could significantly worsen R.I.’s business tax climate“

• In an op-ed in the Rhode Island Current, RIPEC President & CEO Michael DiBiase argued that Rhode Island’s funding formula for K-12 education isn’t working and needs reform. DiBiase noted that urban core districts—Central Falls, Pawtucket, Providence, West Warwick, and Woonsocket—saw declining shares of state education aid increases during the pandemic and that proposals in the governor’s FY 2025 budget would make the funding picture worse. He called for reforms to drive more aid to urban core communities that have disproportionate numbers of students with the greatest educational needs.      

• RIPEC’s report on empty seats in Rhode Island classrooms was featured in a WJAR Channel 10 story. Citing alarming levels of enrollment loss and chronic absenteeism across the state, RIPEC Manager of Research Justine Oliva said that “holistically improving our public education system” is necessary to demonstrate to students and their families that school is “useful and … worth attending on a frequent basis.”

• In an interview with the Providence Business News, Michael DiBiase detailed how the use of some federal one-time funds in the governor’s FY 2025 budget would create a structural deficit for FY 2026 and beyond. DiBiase noted that proposed spending of one-time relief money on corrections, RIPTA, and nursing homes “appear to relate to continuing expenses.”

• The Providence Journal highlighted RIPEC’s finding in an October report that Rhode Island trails the nation when it comes to funding multilingual learners. The report details how the state has been slow to address the growing number of multilingual learners, especially in the urban core, with adequate funding solutions.

Inside Insights

• Simplify LLC released a report ranking Rhode Island 40^th in the country (11^th worst, including the District of Columbia) for entrepreneurs. The study placed the Ocean State last in the country in job creation and 3^rd to last in consumer spending growth.

• The U.S. Secretary of Education visited Rhode Island this month and warned school districts that the federal government would not extend the deadline to expend Elementary and Secondary School Emergency Relief Funds (ESSER) past September 30, 2024. A series of reports from the Anneberg Institute have detailed Rhode Island’s slow rate of ESSER spending.   

• In his testimony to the Special Legislative Commission to Study Housing Affordability, Rhode Island Secretary of Housing Stefan Pryor provided a progress update on the department’s spending down of the State and Local Fiscal Relief Funds (SFRF) allocated by the General Assembly over the last three fiscal years. The state still has $65 million in unspent or uncommitted funds dedicated to housing production that will be subject to rescission if they are not spent by 2026. Preliminary obligations of the remaining SFRF funds are not expected until May.   

What to Look for in March

• The House Finance Committee will hold a hearing March 7^th on Article 8 of the governor’s FY 2025 budget proposal concerning education. Increased funding for multilingual learners, appropriations for math and reading coaches, as well as a significant alteration to the funding formula for education are included in the proposal.