PROVIDENCE, R.I. (WPRI) — Rhode Island leaders will have a massive amount of unspent cash left over to use in the next state budget when the current fiscal year ends on June 30, according to a new report.
The report, published Monday by state budget officer Joe Codega, said the state is on track to finish its 2021-22 fiscal year with a surplus of $878 million when the books close in June — a major increase over Codega’s previous, and already enormous, projection of a $618 million surplus.
The projection is based on actual spending from July through March plus newly updated forecasts for revenue and social services.
The foundation of this year’s surplus is actually last year’s surplus; Codega’s report says the estimated surplus for the 2020-21 fiscal year, which ended last June, has been revised upward to $587 million. The 57% increase was attributed to an increase in state expenses covered by FEMA due to the pandemic.
Tax revenue has also jumped, in part due to inflation, and is now expected to come in $387 million above forecast this fiscal year. FEMA is once again expected to pick up a sizable share of state expenses due to the pandemic, with a new estimate of $210 million for the current fiscal year. Spending has been revised downward, as well.
The new numbers come as the State House’s top Democrats — Gov. Dan McKee, House Speaker Joe Shekarchi and Senate President Dominick Ruggerio — are engaged in behind-the-scenes negotiations over the details of the next state budget, which starts July 1.
Legislators have been holding hearings on McKee’s initial $12.8 billion budget proposal since he introduced it in January. In addition to spending state revenue, the governor has also put forward a plan to allocate $1 billion in federal funding provided to Rhode Island under the American Rescue Plan Act.
Various state leaders have begun floating ideas for how to use the additional surplus. Ruggerio has suggested eliminating the municipal car tax a year earlier than expected, while McKee recently put forward the idea of lowering the state sales tax from 7% to 6.25%. Others have suggested temporarily halting the state gas tax or giving out $500 tax rebates.
However, the chairmen of the House and Senate Finance Committees — Rep. Marvin Abney, D-Newport, and Sen. Ryan Pearson, D-Cumberland — warned last week that rising inflation is also going to increase expenses in other parts of the budget, which could leave less of the surplus freely available to spend.
Ted Nesi (email@example.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 and Facebook