RIPEC: With unexpected surplus, state should support economic development, ‘vulnerable’ agencies or rainy day fund

A RHODE ISLAND PUBLIC EXPENDITURE COUNCIL analysis of Rhode Island's fiscal 2015 budget concludes that the state ran a $166.4 million surplus, $47.8 million more than had been expected. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL
A RHODE ISLAND PUBLIC EXPENDITURE COUNCIL analysis of Rhode Island's fiscal 2015 budget concludes that the state ran a $166.4 million surplus, $47.8 million more than had been expected. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL

PROVIDENCE – Thanks largely to general revenue exceeding estimates and state agencies spending under budget in fiscal 2015, Rhode Island has a surplus for the year that is $47.8 million larger than anticipated, bringing the total for the year to $166.4 million, according to an analysis done by the Rhode Island Public Expenditure Council.

The nonprofit researcher of public policy recommends state lawmakers use the excess funds for one-time economic development projects, financially vulnerable state agencies or the state’s rainy day fund.

RIPEC released its analysis of the unaudited fiscal 2015 budget on Wednesday. After accounting for an approximate $1.4 million transfer to the state’s rainy day fund, RIPEC estimates the total extra surplus available for fiscal 2016 is $46.4 million.

“The larger than-anticipated [fiscal] 2015 closing surplus resulted from a combination of general revenues exceeding final estimates and state agencies spending less than they were appropriated,” according to its report.

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General revenue, tallied for the fiscal year ending June 30, exceeded estimates by $23.9 million. The state collected more than expected amounts in areas including $4.8 million from the business corporate tax, $9.5 million from the sales and use tax and $3.3 million in lottery revenue, according to the report. Total revenue for fiscal 2015 reached $3.6 billion, representing an increase of 0.7 percent – or roughly $20 million – more than the expected total.

Concurrently, the state was under budget in several departments, including $9.2 million from the Executive Office of Health and Human Services, $5.3 million from the Department of Administration and $4.4 million from the state’s legislature, according to the report. Total expenditures fell 0.6 percent – or $21.5 million – short of the budgeted amount of $3.48 billion.

RIPEC in its report urged lawmakers against using the excess funds to establish programs with year-over-year reoccurring financial obligations, but rather put it toward the generation of economic development, patching state agencies or to bolster the state’s rainy day fund.

For economic development, RIPEC says the state should reinvest the money into infrastructure projects, such as road or bridge work. Lawmakers are currently mulling over Gov. Gina M. Raimondo’s major infrastructure plan called RhodeWorks.

Citing overspending in agencies, including the Department of Children, Youth and Families and the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals, RIPEC urges policymakers to use the funds to support these departments, should they need supplemental funding. It also noted current estimates that show the state’s Medicaid program currently above budget, according to the first day of the November 2015 Revenue and Caseload Estimating Conference.

Finally, RIPEC recommends the surplus would be well-spent to bolster the rainy day fund, which studies suggest aren’t enough to protect the state should future revenue falter.

“With additional funds available, now many be an opportune time for policymakers to reassess the state’s rainy day fund to determine if it is appropriately sized or if changes are needed,” according to the report.

The entire report can be found HERE.

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