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May 9, 2008
Update: R.I. budget gap, largest in decades, grows again
PROVIDENCE -- Ten days after the General Assembly cut local community aid and some health-care benefits to balance this year's state budget, it has an even more ominous task: balancing a larger fiscal 2009 budget deficit that's grown by $50 million to $55 million, according to figures released today.
The deficit for the year beginning July 1, which the governor previously put at $384 million, is projected to have grown, though it's not as simple as adding the projected growth to the previous figure, according to officials at a revenue-estimating conference at the State House today.
The primary cause was said to be lagging income and sales tax collection because of the weakened state economy.
The increase is not surprising given that The Journal reported Tuesday those revenue sources --the state's largest -- are down sharply through the first 10 months of the fiscal year, as lawmakers grapple with closing the largest deficit in nearly two decades.
“I was pleased when the General Assembly largely accepted my spending reduction proposals for the current fiscal year,” Governor Carcieri said in a statement late today. “Unfortunately, these new projections leave us with much more work to do. In the coming weeks, I will be meeting with the legislative leadership to jointly develop plans that will resolve the expanded deficit.”
Carcieri said that "whatever course we take, we must avoid raising taxes to solve this problem. Rhode Islanders already bear one of the highest total tax burdens of any state in the nation."
-- projo.com staff writer Michael P. McKinney, with reports from Steve Peoples of the Journal State House Bureau
Economists reported last week that the state is one of nine around the country and the only in New England going through an economic recession.
The state's tax administrator said earlier this week that sales tax collections were down $23 million, or 3.1 percent, compared with the same period last year, while income tax revenue is down $9 million, or 1 percent. Should the trend continue through the end of the fiscal year in June, as expected, it would be the first time that the state’s largest two revenue sources collectively fell since the early 1990s.
Today's conference included the governor's budget officer and the fiscal advisers for the House and Senate.
To close a mere $168 million deficit in this year's budget, lawmakers made cuts to aid to cities and towns, reduced health-care benefits for retired state workers and eliminated subsidized health care for more than 2,800 immigrant children. The plan doesn’t increase any state taxes, but the cuts drew rancorous debate as lawmakers finallly approved the plan.
Another debate awaits them.
Posted by Mike McKinney
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The general assembly is going to have to trim the state back to the time frame when we all voted in the lottery commision. This will be painfull, will require capping state non union wages to a max $99,000 level across the board, and reduce the number of agencies. A new way of thinking for federal money as "taxpayer money" with a strict accounting and rule following will also be needed.
Just think back, the lottery was to enable the state to remove the sales tax. With our democratic general assembly big spenders the laugh is now on the taxpayers that reelected them.