RI budget picture darkens: revenue $43M off

PROVIDENCE, R.I. (WPRI) – The budget math just keeps getting harder for Rhode Island leaders.

State revenue came in $43 million lower than forecast through March 31, the R.I. Department of Revenue reported Tuesday, totaling $2.13 billion for the first nine months of the state’s budget year. That amount is 1.8% below what Democratic Gov. Gina Raimondo projected when she introduced her proposed budget in January, using an official estimate developed last fall.

The state’s two biggest sources of revenue – the income tax and the sales tax – are off 0.6% and 1.7%, respectively. Also weighing on revenue is the estate tax, $6.8 million below forecast, and general business taxes, $22.7 million below forecast.

The newly released numbers reflect the same ongoing weakness in state revenue that has been seen for four months now, and they indicate lawmakers will have to make tougher choices as they put together the final budget over the next two months than they have in recent years, when revenue came in above forecast.

And it’s not the only challenge lawmakers will face as they try to make the numbers add up. The R.I. Executive Office of Health and Human Services acknowledged last week that Medicaid spending is running higher than planned, partly due to problems with the Unified Health Infrastructure Project (UHIP) computer system.

Democratic House Speaker Nicholas Mattiello has repeatedly pledged to include about $40 million in the final budget to pay for a cut in the municipal car tax, and when pressed on where he’ll find the money, the speaker has said he hoped rising revenue from a pickup in economic growth would make up the difference. Otherwise, cuts will have to be made elsewhere.

The darker revenue picture could also pose a challenge to Raimondo, who’s spent months campaigning to provide two years of free tuition at the state’s public colleges. Her January budget proposal included $10 million as a down payment on the plan, with the cost projected to rise to $30 million annually once the program is up and running in four years.

The official revenue numbers that will be used to write the final budget will be released on May 10. The state’s 12-month budget year runs from July 1 to June 30.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook