Report on the May 2008 Revenue and Caseload Estimating Conference

This report provides a mid-year update on projected economic indicators and state revenues based on the May 2008 Revenue Estimating Conference. The report also includes a discussion on changes the Caseload Estimating Conference made to Medicaid expenditures and to the state’s projected caseloads for certain social service programs.

For FY 2009 the Revenue Estimating Conference (REC) estimates revenues in the amount of $3,215.3 million. FY 2009 estimates are $132.2 million less when compared to the Governor’s proposed revenues of $3,347.5 million for FY 2009; however, it should be noted that the REC did not include revenues achieved through reinstating the hospital licensing fee in the amount of $78.0 million. If these amounts were factored into the estimated REC revenues, the adjusted revenues would amount to $3,293.3 million or $54.2 million less than the Governor’s proposed revenues in his FY 2009 budget.

At the time the Governor proposed his FY 2009 budget, the shortfall was projected to be about $385.0 million. The proposed budget closes this gap through a combination of revenue enhancements and expenditure reductions. Revenue enhancements include: reinstating the Hospital Licensing Fee and increasing the rate of assessment ($110.7 million); and transferring $4.0 million from the Resource Recovery Corporation. Proposed expenditure reductions include: capping FTEs at 14,796.6; decreasing parental eligibility for RIte Care ($12.8 million); creating the Ocean State Medicaid Waiver Initiative (projected savings of $67.7 million); and level-funding municipal aid at reduced FY 2008 revised levels.

Based on REC estimates, if the General Assembly were to accept the Governor’s revenue enhancements and expenditure reductions based on his proposed FY 2009 budget, they would have to enhance revenues by approximately $20 million or reduce expenditures by the same amount, or a combination of both, to balance the FY 2009 budget.  One should note that this shortfall does not include any potential additional revenues from the proposed 24-hour gambling and does not include debt service due to the restructuring of the Historic Structures Tax Credit.

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