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RI state revenue forecast slashed by almost $800 million

Target 12

PROVIDENCE, R.I. (WPRI) — Rhode Island’s top number-crunchers made it official Friday afternoon, cutting their two-year forecast for state revenue by nearly $800 million and setting the stage for what could be the most brutal budget negotiations in living memory.

At the state’s twice-a-year Revenue Estimating Conference — with only two participants attending in person due to the coronavirus pandemic — finance experts from the Raimondo administration, the House and the Senate determined general revenue will be almost 10% below what they forecast the last time they met back in November.

“This is definitely unprecedented,” said State Budget Officer Tom Mullaney, who’s been a Rhode Island budget official since 1987 and has worked through emergencies including the credit union crisis and the Great Recession.

“The Great Recession, it probably hit these numbers over several years,” Mullaney said. “This is so dramatic in such a short period of time. And that’s what makes it very much unusual.”

The new estimates show state general revenue is projected to drop from $4.02 billion in the last budget year (2018-19) to $3.9 billion in the current 2019-20 fiscal year, which is $281 million less than the same officials had previously projected for the current year.

The situation is only expected to worsen from there, with a further decrease to $3.73 billion during the new 2020-21 fiscal year that starts July 1. That amount is $516 million less than they had expected last fall.

The estimates presume the state two’s shuttered casinos will resume some operations in June, though officials cautioned that when to reopen them has not been decided and will be based on health guidelines.

The House Finance Committee is expected to resume budget hearings next Thursday after avoiding the State House for nearly two months due to the public health crisis.

“The results of today’s revenue conference reinforce the magnitude of the current crisis,” committee chairman and Newport Democrat Marvin Abney said in a statement. “However difficult it may be, we are prepared to rise to the challenge of ensuring that the state meets its obligations for essential government services, while mindful of the hardships already facing so many Rhode Islanders.”

Rhode Island is far from alone, as states from coast to coast suffer a sudden plunge in revenue as unemployment soars and business activity dries up due to the coronavirus shutdowns. Massachusetts is expecting its revenue to be off by billions of dollars.

During a conference call with reporters on Friday, Gov. Gina Raimondo warned that the budget outlook was bleak, and suggested the state’s only hope of avoiding deep spending cuts is another major spending bill out of Congress that provides additional aid to states and cities. She said she hopes federal lawmakers have made a decision on that by Memorial Day.

“I’m not inclined to do anything for the next three weeks because there’s so much unknown from the federal government,” Raimondo said.

U.S. Sen. Jack Reed, who was a lead Democratic negotiator of the $2.2 trillion CARES Act in March, announced Friday that he is filing a new bill, the State & Local Emergency Stabilization Fund Act, that would provide an additional $600 billion to states and cities.

It would also give Rhode Island additional flexibility to use the $1.25 billion in Coronavirus Relief Fund money that Reed secured for the state in the CARES Act. That money is currently required to be used solely for direct costs associated with dealing with COVID-19, but Reed wants lost revenue to count as a qualified cost.

The state has received hundreds of millions more in other additional federal aid on top of the $1.25 billion, as well, much of it directed to specific programs and agencies.

Senate President Dominick Ruggerio offered a grim assessment of the situation Friday. “There will be no easy decisions in the coming weeks,” the North Providence Democrat said in a statement.

“It is an understatement to say we have a lot of difficult choices ahead,” added Senate Finance Committee Chairman William Conley, D-East Providence. “We will work to minimize the impacts on cities and towns, and on Rhode Islanders who are already struggling during these unprecedented times, but the road ahead will not be easy.”

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

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