PROVIDENCE, R.I. (WPRI) — Rhode Island’s state budget remains in solid shape for the current fiscal year, according to a new report, even as the outlook for next year appears much more challenging.

The report, issued Monday by the R.I. Office of Management and Budget, said the state is on track to finish its 2020-21 fiscal year with a surplus of $44 million when it closes its books June 30. The projection is based on actual spending from July through December and also incorporates updated forecasts for revenue and social services.

The state’s finances are stronger than budget experts had expected last spring, when they predicted a deficit as large as $900 million due to the COVID-19 pandemic. That number has fallen thanks to a more resilient economy and generous support from the federal government.

Still, there is an unusual amount of uncertainty surrounding budget estimates right now because of the pandemic, due not only to the public health crisis itself but also the complex accounting involved in determining which COVID-19 costs can be charged to the federal government.

The latest Office of Management and Budget report comes as the Rhode Island Public Expenditure Council, a business-backed think tank, is projecting a roughly $500 million budget deficit for the 2021-22 fiscal year, which begins July 1.

Incoming Gov. Dan McKee is required to submit a plan to close that shortfall next month. President Biden’s $1.9 trillion stimulus package, which is currently moving through Congress, would direct roughly $1.1 billion to Rhode Island if it passes in its current form, according to U.S. Sen. Jack Reed.

Among the challenges identified in the new budget report are the ongoing problems with federal Medicaid billing at the Eleanor Slater Hospital, the state psychiatric facility. Lawmakers had assumed the state would save $10 million by resolving those billing issues, but the report reduced that amount to $6.7 million, attributing the change “primarily” to a smaller number of patients affected.

OMB also said the report does not include the financial impact of President Biden’s Feb. 2 order increasing FEMA’s reimbursement percentage for state COVID-19 costs from 75% to 100%, which will provide additional federal money for the state. Reed, a member of the Senate Appropriations Committee, has estimated that change will save the state roughly $33 million.

Ted Nesi ( is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook