RI on track to run $60M budget deficit this year

Eyewitness News Investigates
RI State House_459244

PROVIDENCE, R.I. (WPRI) – Red ink is on the rise at the State House.

In a report issued Wednesday, state budget officer Tom Mullaney said the state is on track to finish its 2017-18 fiscal year with a deficit of $60.2 million when the books close next June. The projection is based on actual spending from July through September plus last week’s updated forecasts for revenue and social services.

The main driver of the deteriorating budget picture is overspending by state agencies, which are on pace to spend about $64 million more than lawmakers authorized in the budget passed earlier this year. The biggest culprits: $28.6 million more for Medicaid, $16 million more at the Department of Behavioral Healthcare, Development Disabilities and Hospitals (BHDDH), and $10 million more at the Department of Children, Youth and Families.

BHDDH said the reasons for its overspending include a new assessment tool that has “resulted in many clients moving to higher levels of acuity, thereby requiring additional and more costly services.” DCYF cited a jump in the per-diem rate for child welfare placements, from $274 to $364 a day. The Department of Human Services said it expects to spend nearly $6 million more than planned, mainly because of higher staffing required to deal with the UHIP computer fiasco.

House Speaker Nicholas Mattiello reacted glumly to the report.

“While there are always unexpected events and problems, it is disappointing that much of this issue appears to have been avoidable with tighter controls and better execution of budget initiatives that originated with the agencies themselves,” Mattiello, D-Cranston, said in a statement.

On the other side of the ledger, tax revenue is expected to come in about $10 million lower than originally expected this fiscal year, according to new estimates released Friday night.

One bright spot: the expansion of Medicaid under the federal Affordable Care Act is costing the state less than expected, with that portion of the health program expected to come in $21.5 million below forecast. Mullaney also said the projected deficit will shrink by about $7 million if Congress reauthorizes the Children’s Health Insurance Program (CHIP), which was recently allowed to lapse but could be revived soon.

This is the first time since 2014 that Rhode Island has been facing a current-year deficit in November, and the worsening fiscal picture will make it harder for Gov. Gina Raimondo to balance her proposed 2018-19 budget, which is due to the General Assembly by Jan. 18. Lawmakers usually wait until June to approve a final budget.

Before the new numbers were released, Raimondo’s aides had projected that she would need to close a deficit of $237 million in her January proposal. Mullaney did not provide a revised estimate Wednesday for how large the deficit is now expected to be.

House Finance Committee Chairman Marvin Abney said his panel will meet in a few weeks to review the budget situation, as well as corrective-action plans that the various agencies are required to submit.

“I certainly expect that efforts to curtail any unnecessary spending are already underway as we near the halfway point in the fiscal year,” Abney, D-Newport, said in a statement. “We face another challenging budget year and better management of spending is an essential component to easing that task.”

Mullaney’s office published this list of all agencies projected to spend significantly more or less than authorized under the budget adopted by lawmakers:

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

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