PROVIDENCE, R.I. (WPRI) — Rhode Island is on track to run a $114 million deficit in the current fiscal year, a significant amount of money but far below the roughly $900 million shortfall estimated at the height of last spring’s lockdown, according to a report issued Monday night.
The updated deficit estimate was contained in the quarterly financial report released by R.I. Office of Management & Budget Director Jonathan Womer. The figures carry more uncertainty than usual due to the unprecedented circumstances of the coronavirus pandemic; state leaders have delayed passing a new state budget for the current fiscal year, which began back on July 1.
Without a new budget enacted, state agencies are currently operating under a monthly allotment, with their funding based on one-twelfth of what they might otherwise receive. Limits have also been placed on state hiring and spending.
The reasons for the sharp reduction in the deficit include an upward revision to this year’s revenue forecast of $330.6 million and a $180 million surplus carried over from the 2019-20 fiscal year. The report also excludes $139 million in spending increases the governor has recommended.
State Rep. Joe Shekarchi, who was chosen by House Democrats earlier this month to succeed Nicholas Mattiello as speaker in January, said on last week’s Newsmakers that he expects the General Assembly to return to work in early December to pass a so-called “skinny” budget for the 2020-21 fiscal year, partly to ensure the state can use its full $1.25 billion allocation from the CARES Act’s Coronavirus Relief Fund.
However, that $1.25 billion is not the entirety of the state’s coronavirus-related federal funding. The quarterly report says the state currently estimates it has been awarded a total of $1.66 billion classified as “pandemic relief,” which includes costs eligible for FEMA reimbursement and various smaller grants.
Adding to the uncertainty, a footnote in the report indicates that state officials have received new federal guidance which suggests they may get more federal funding for personnel costs dating back to the 2019-20 fiscal year, which could free up more state revenue going forward.
Shekarchi indicated larger policy decisions may be punted to the eventual debate over the 2021-22 budget next year.
Michael DiBiase, the former R.I. Department of Administration director who now leads the Rhode Island Public Expenditure Council, has warned the fiscal environment for the 2021-22 budget could be much more challenging for state policymakers than the current one.
The new budget report itself warns, “Without additional federal assistance, augmentation to state revenues, and/or reductions in state expenditures, there is significant risk that available resources will be insufficient to fund both the normal operations of state government as well as necessary emergency response costs through the end of the fiscal year.”
Ted Nesi (email@example.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook
An earlier version of this article misstated the accounting of the $120 million rainy-day fund transfer.