Today, the Rhode Island Public Expenditure Council (RIPEC) released an analysis of Rhode Island’s budget outlook based on the preliminary FY 2012 closing, debt position, and 2012 ballot questions. The full report is available here.
Due to increased revenues and lower-than-anticipated expenditures, the state’s projected opening surplus for FY 2013 was increased by roughly $22 million. Despite this, the state continues to face significant deficits in the out-years as expenditure growth continues to outpace revenue growth. Unless the state’s structural deficit is resolved, the state will continue to have to choose between making investments in its future and relying on short-term financial fixes and one-time solutions.
Capital investments provide both much-needed infrastructure improvements and can help boost the state’s economy. However, how the state funds these projects – particularly with regard to increased debt – is an important consideration. Although the state has made significant improvements in debt management in recent years, it still ranks in the top half of the country for debt per capita and as a share of personal income. Ultimately, voters must weigh the benefits of capital investment against the long-term costs, given the state’s fiscal position.
RIPEC has traditionally not taken positions on bond referenda questions. However, RIPEC encourages taxpayers to consider whether the proposed projects will result in investments that strengthen the state’s economy and help grow jobs, whether the current interest rate and employment environments are optimal for the projects, and whether the projects will help the state achieve its policy goals.