RI lawmakers tap rainy day fund, federal COVID cash to close budget hole

Politics - Government

PROVIDENCE, R.I. (WPRI) — Rhode Island legislative leaders on Monday unveiled a revised state budget for the fiscal year that ends this month, proposing to use the state’s rainy day fund as well as federal COVID-19 relief money to help deal with a deep decline in revenue caused by the pandemic.

The House Finance Committee posted the revised 2019-20 budget bill, known as a supplemental, online Monday afternoon ahead of a hearing and vote expected Tuesday. The Senate Finance Committee is scheduled to hold its own hearing on the measure Tuesday, with final votes in both chambers potentially happening later this week.

The final budget for 2019-20 clocks in at a massive $11.8 billion, a huge increase from the original $9.8 billion total, driven by a whopping $1.5 billion in additional federal funds beyond what was expected when the original budget was enacted last year.

Federal money accounts for about 41% of the final budget, with general revenue spending coming in at just under $4 billion, a reduction of $119 million from the original.

Among other moves, the budget uses $120 million from the state’s roughly $200 million Budget Reserve and Cash Stabilization Account — better known as the rainy day fund — as well as additional “scoops” from the accounts of various state and quasi-public agencies.

The new “scoops” include $5 million from the Rebuild Rhode Island tax credit account; about $500,000 from the Air Service Development Fund; nearly $22 million from the Rhode Island Infrastructure Bank; $500,000 from the asset forfeiture account at the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals; and about $257,000 from bond funds tied to Rocky Point Park and pollution control.

It also distributes $50 million of the $1.25 billion that Rhode Island received through the CARES Act Coronavirus Relief Fund to local school districts, with more money going to communities with larger numbers of low-income children. That new $50 million is on top of a separate $41.7 million that Congress included in the CARES Act for education aid; in the case of the $41.7 million, however, state-funded aid to schools will be reduced by an equivalent amount.

Another major problem the budget had to solve: ongoing billing and compliance problems at the Eleanor Slater Hospital state psychiatric facility.

The revised 2019-20 budget allocates nearly $65 million in additional state money to cover costs at Slater that wound up being ineligible for federal Medicaid funding, some of it tied to the botched UHIP computer system. House staffers say the state faces another $12 million in costs at Slater if the Raimondo administration and the federal government don’t come to an agreement on the situation.

The unprecedented circumstances — and deficits — caused by coronavirus have led to an unorthodox approach to the General Assembly’s procedure for passing a budget. Usually approval of a supplemental budget to bring the current fiscal year into balance is a relatively minor endeavor, handled as a section of the new budget bill for the next fiscal year.

This year, however, Gov. Gina Raimondo, House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio have all agreed to punt on finalizing a 2020-21 budget until later in the summer in the hopes that Congress will enact another federal relief bill that will provide significant additional money that can be used to fill an enormous shortfall that could top $600 million.

Congressional Democrats are united in seeking additional budget aid for states, while some Republicans have expressed reservations. Trump administration officials have suggested they are open to the idea but haven’t indicated how much they would support.

The largest source of new federal money in the newly released supplemental budget bill is over $1 billion in additional funding for unemployment benefits, which have been significantly expanded since the coronavirus crisis began. State-funded unemployment benefits spending is up by $340 million, as well.

The federal funding has helped the state preserve its unemployment insurance fund, which totaled $342 million as of Monday. State officials expect the fund will likely run out at some point, given the high level of claims, but the CARES Act has certainly helped slow the drain. States that exhaust their unemployment funds can take out no-interest loans from the federal government to pay benefits.

“The CARES Act has bought us some time and we will not have to borrow from the federal government just yet,” R.I. Department of Labor and Training spokesperson Angelika Pellegrino said Monday. “But when the time comes, we will not be surprised.”

Mother Nature wound up helping balance the budget, too: the R.I. Department of Transportation spent $15 million dealing with winter weather this year, which was about $6 million less than budgeted, thanks to the mild season.

Ted Nesi (tnesi@wpri.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

Eli Sherman and Caroline Goggin contributed to this report.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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