Soaring tax revenue gives RI leaders $324 million more for state budget

Politics - Government

PROVIDENCE, R.I. (WPRI) — Rhode Island lawmakers are facing a radically different financial picture than they expected six months ago, with far more money available as they craft the state budget.

The number-crunchers who lead the twice-a-year Revenue Estimating Conference said state revenue will be $177 million higher in the current 2020-21 budget year and $147 million more in the upcoming 2021-22 budget year compared with what they forecast when they met last in November.

The close of the May revenue meeting fires the starting gun on the always-frantic closing weeks of the General Assembly session, as Rhode Island legislative leaders finalize a budget, their biggest undertaking of the year. A new budget is written for each fiscal year, which runs July 1 to June 30.

That $324 million in newly identified tax revenue is separate from the more than $1 billion that the state will soon receive from President Biden’s American Rescue Plan Act. That law directs $350 billion in federal funds to help states and municipalities balance their budgets, and on Monday the administration released specifics about how the money can be spent.

But the two lawmakers with chief responsibility for Rhode Island’s budget — House Finance Committee Chairman Marvin Abney and Senate Finance Committee Chairman Ryan Pearson — indicated they don’t expect to include any of the Biden money in the budget they craft over the coming weeks.

“With today’s release of federal guidance on allowable uses of the state’s American Rescue Plan funding, we fully expect the broader effort to identify the specific investments for these funds will extend beyond June,” Abney, D-Newport, and Pearson, D-Cumberland, said in a joint statement.

“Our respective committees will gather and consider ideas and proposals from all Rhode Islanders,” they said. “We are pleased the Rhode Island Foundation and Governor McKee are soliciting proposals to present to the Assembly for consideration through an open and public process.”

“We are committed to getting these long-term decisions right, and doing that will take time and deliberation,” they added.

This will be the first budget Assembly leaders negotiate with Democratic Gov. Dan McKee, who succeeded Gina Raimondo in March. McKee proposed an $11.2 billion tax-and-spending plan for the 2021-22 fiscal year just days after taking office, but at the time his advisers indicated the final product would likely be significantly different due to the fast-changing fiscal environment.

The new numbers agreed to at Monday’s Revenue Estimating Conference project Rhode Island’s state revenue will rise 3.7% during the current 2020-21 fiscal year to $4.22 billion, up from $4.06 billion in 2019-20. It’s projected to climb from there to roughly $4.35 billion in 2021-22.

The governor and lawmakers are required by law to use the Revenue Estimating Conference’s forecasts when they put together the state budget.

Ted Nesi (tnesi@wpri.com) 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, Facebook, LinkedIn and Instagram

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