In his fiscal 2013 budget proposal, Gov. Lincoln D. Chafee looks to help the state’s towns and cities by increasing state support of local education. While the goal is laudable, it just doesn’t fit the state’s public-sector crisis.
First and foremost, the decline in state aid to towns and cities is the result of state government not getting a handle on its structural deficits.
And while last fall’s pension-reform law was a good first step toward matching Rhode Island’s fixed costs and yearly income, it is by no means enough.
Despite that reality, the governor’s 2013 budget proposes that Rhode Island spend an additional $126.7 million, or 3.1 percent, more than fiscal 2012’s budget. This increase follows a 10 percent spending hike in fiscal 2012 over 2011.
Rhode Island’s real gross state product is expected to grow 1.8 percent in 2012, which follows negative growth from 2005 to 2010 of (0.1 percent). The state’s budget simply cannot grow faster than the state economy and be sustainable. Clearly, then, increasing spending is not the path forward.
And yet Gov. Chafee has chosen just that route. He proposes to raise revenue through new or expanded taxes and fees, including a 2 percentage point increase in the meals tax. In the current fragile economic climate, the tax increases are just as likely to depress consumer spending as not, something that will drive the amount of tax revenue yielded down with it, killing the reason for having the new tax in the first place.
Gov. Chafee is right to put a high priority on investing in education. But he still needs to do a better job at holding the line on overall spending. •