Rhode Island state budget (2009-2010)

Rhode Island addressed a deficit of $427 million for FY 2011 with a $7.8 billion budget bill passed in June 2010.^[1][2] Gov. Donald Carcieri warned in 2009 that the situation could get worse as the turning point in the economic downturn had not been reached and in light of the state's growing 12.8% unemployment rate and did not sign the recent budget bill due to its reliance on federal funds.^[3][4]

Rhode Island had a total state debt of $9,087,812,958 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.^[5]

Fiscal Year 2011 State Budget[edit]

See past Archived Rhode Island state budgets

On November 10, 2010, financial advisers advised lawmakers that the state's revenues were approximately $16.7 million higher than expectations.^[8]

In June 2010, the General Assembly passed a $7.8 billion state budget for 2010-11, which was crafted to close both a $182 million deficit for FY2010, which ends June 30, 2010, and a projected $386 million shortfall for FY 2011, which starts on July 1, 2010. The budget did not raise sales or income taxes. It pares back public-employee pensions payouts for state retirees by eliminating cost-of-living increased for retirement benefits above $35,000.^[1] State retirees must also wait until age 65 to get their first increase.^[4]

The budget reduces state aid to cities and towns by $150 million over 13 months, but allows the municipalities to compensate for the loss by taxing all but the first $500 in value of cars and trucks; before they were blocked from taxing the first $6,000.^[4] The cut in local aid led to some towns shutting off their street lights and closing swimming pools.^[9]

The governor said he would not sign or veto, meaning it would become law without his signature.^[1] Carcieri cited its inclusion of $108 million in federal Medicaid payments that had not yet been approved in Washington as a key reason for refusing to sign the budget.^[1] The budget included a provision permitting the governor to make across-the-board cuts if the Medicaid money was not approved by Congress, although the General Assembly could make changes to the proposed cuts.^[1] Carcieri was not wholly negative, however, saying in a news release, “I believe we had set Rhode Island on a course that allows the state to emerge from the recession stronger and more competitive. We had done better than hold the line on taxes. We had reduced taxes for most Rhode Islanders. We had improved the business climate by supporting access to capital and loan-guarantee programs, tackling regulatory reforms, making it easier to did business."^[4]

Federal Funds[edit]

The FY2011 state budget assumed that the state would receive about $107 million from the federal government for Medicaid reimbursements.^[10] In actuality, the state would receive $70 million for Medicaid and nearly $33 million dedicated to schools.^[10] Gov. Carcieri said he would like to put the entire $103 million towards Medicaid, but it was unclear if the governor can alter the destination of the federal funds clearly marked for education and the Assembly would have to approve the move.^[10]

FY 2010 Budget[edit]

The state ended FY2010 with a nearly $18 million surplus, which the state plans to carry forward to FY2011.^[10]

The FY 2010 budget passed by the Rhode Island General Assembly in 2009 directed Gov. Carcieri to cut $67.9 million from "statewide reductions to personnel and operating expenses,"^[11] but did not specify how the reductions were to be achieved. Gov. Carcieri planned 12 state government "shutdown" days during FY 2010 with the first on September 5, 2009 to meet the budget's stipulation. The state employee unions sought legal means to prevent the shutdown plan, obtaining by appeal a temporary stay against it on September 3, 2009 from Rhode Island Supreme Court Justice Maureen McKenna Goldberg.^[12] Being unable to meet the budget's payroll reduction requirements with furloughs, Gov. Carcieri announced that same day he would need to send out 1,000 layoff notices to state employees stating:^[13]

"This decision by Justice McKenna Goldberg may just be the straw that broke the camel’s back, sending this state down the path to financial ruin, as it gives greater weight to union and special interest demands rather than the fiscal reality of the state and the employment of state workers,” said Governor Carcieri. “Preventing the state from moving forward with the shutdown days cripples our ability to address growing budget gaps, and stops the executive branch from fulfilling its constitutional duty to balance the state’s budget.”

“The financial reality we face was unchanged by her decision. The fact is, we were continuing to lose revenue and our fiscal health was deteriorating. Her decision did change, however, our ability to cope with this reality as it strips us of reasonable options to manage through this recession.”

“She had left me with no option but layoffs. I had asked my department directors to identify the last 1,000 people hired and begin the process of layoff notifications.”

“It should greatly disturb every state employee and every Rhode Islander that labor leaders were willing to sacrifice people’s jobs so they can maintain their stranglehold on the citizens of this state.”

The state employee unions finally reached an agreement with Gov. Carcieri in October 2009, making concessions to delay by 6 months planned 3% raises on July 2010 and accept 8 days off this year and 4 days off next year.^[14]

Deficit Projections[edit]

In May 2010, however, at the Revenue and Caseload Estimating Conference, state budget officials said that the state government’s deficits were smaller than previously believed, in part due to higher-than-expected tax revenues, which generated $36.5 million more this year than previous estimates anticipated.^[2] The update occurred at a conference required by law at which House, Senate, and Governor's budget staff to meet twice a year to update and revise revenue levels.^[15] At that conference in May 2010, Senate Fiscal Advisor Peter Marino predicted that budget deficits would shrink by approximately $43 million this year and another $32.5 million next year.^[2] Given the shrinking deficits, the Assembly could avoid dipping into the state's rainy day fund and also avoid refinancing the state retirement system’s massive unfunded liability.^[2] The legislators gave no time line for when they would release amended current-year budget and next year’s plans.^[2]

Delayed Payment of Individual Income Tax Refunds[edit]

That good news, however, did not prevent the state from delaying payment of 53,000 individual income-tax refunds amounting to approximately $36.3 million. Paul L. Dion, chief of the state Office of Revenue Analysis, said that Rhode Island did so to ensure that it can pay off state borrowings that come due in June.^[16] Officials initially said that it was delaying payment of refunds which were usually processed in a week by about three weeks after the returns were processed. but that delay grew to four to six weeks.^[16]

Rhode Island and other states routinely borrow early in the fiscal year to help pay for expenses, and then repay the money with revenue from taxpayers. Due to a delay in the tax filing deadline until May 11 because of flooding, tax revenue did not flow into state coffers as quickly as it otherwise would and so the state needed to hold refunds longer.^[16]

The state was not required to pay interest on refunds until 90 days after the due date for returns, at a rate of 3.25%.^[16]

Budget background[edit]

See also: Rhode Island state budget and finances

The June 2009 finalized FY 2010 state budget expenditures were set at $7.81 billion, $146.2 million more than Gov. Carcieri recommended. The General Revenue budget was $3 billion, $78.7 million less than the Governor's recommendation and $0.8 million less than FY 2009 ($404.9 million less than FY 2008). The budget incorporates $633.5 in federal stimulus money, $189.3 of which was directly for state budget relief.^[17][18]

Rhode Island's fiscal year begins July 1 and ends June 30 of the following year. According to the state Constitution, every year the Governor must present a spending recommendation to the Legislature. However, prior to the Governor's presentation to the Legislature on the third Thursday in January, the Governor reviews individual agency requests along with past and present expenditure and revenue data. Both the Senate and the House use the following months to making necessary adjustments to the proposed budget bill. Once both houses approve a final budget the bill returns to the Governor who may veto legislative appropriations. The Legislature may override any veto by a two-thirds majority vote.^[19]

Budget figures[edit]

The following table provided a history of Rhode Island's expenditures and gross domestic product (GDP).

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Rhode Island state budget (2008-2009) for more information.

Accounting principles[edit]

See also: Rhode Island government accounting principles

The Office of the Rhode Island Auditor General (OAG) was the State of Rhode Island's legislative audit agency, conducting financial and performance audits to provided independent information to the General Assembly on a variety of topics including the State's financial condition, its use of federal funds in compliance with federal law and regulations, and whether programs were operating efficiently and effectively. The OAG's audit reports were published online. Ernest A. Almonte had been the Auditor General of the State of Rhode Island since 1994.^[21][22]

The Institute for Truth in Accounting (IFTA) rates Rhode Island “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Rhode Island's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not included significant liabilities for the pension plans and for other post employment benefits, such as health care.^[23] Rhode Island's CAFRs were annual publications of the Rhode Island Office of Accounts and Control under Marc A. Leonetti as State Controller. Despite the tardiness of previous CAFRs, the Office of Accounts and Control already had posted the preliminary 2009 CAFR on its Web site.^[24][25]

The Office of Accounts and Control was responsible for the financial integrity and accountability of state government through sound administrative and accounting controls and procedures. The office was also responsible for the preparation and/or coordination of several publications, including the Comprehensive Annual Financial Report, Condensed State Financial Report, State Payroll Manual, Procedural Handbook of the Department of Administration, and the Consolidated Statewide Cost Allocation Plan.^[26]

Economic Stimulus Package[edit]

The state would receive approximately $107 million from the federal government under HR 1586^[28], a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[29]

Rhode Island received approximately $1.08 billion from the $787 billion dollar ARRA 2009 economic stimulus.^[30] All told, the federal stimulus plan would create or save 12,000 jobs in Rhode Island, based on White House estimates.^[31]


According to preliminary reports, Rhode Island was expected to receive:

• $3.4 million would be used towards local train stations^[32]
• $165 million in stabilization funds^[33]
• $135 million towards public school and three public colleges^[33]
• $11 million for the Providence VA Medical Center^[34]
• $17 million to retrain workers and employ youth^[35]

Budget transparency[edit]

Rhode Island began posting its checkbook register online in February of 2008. The site was created using existing monies within the current state budget.^[36] It allows citizens to view the Treasury's Accounts Payable expenditures.^[37] The checkbook register was posted by the Treasurer of Rhode Island, Frank T. Caprio as fulfillment of his campaign promise made in 2006:

"This pilot project achieves a key priority of my administration. Our hope was that the Office of the General Treasurer's transparency site would quickly become the model for state and local government in their efforts to be more accessible and accountable to the taxpayers of Rhode Island," Treasurer Caprio said.^[37]

The site also contains information on the current years fiscal statement, budgets and some general salary data.^[38] The state also had various Independent transparency sites.

Rhode Island's Department of Administration began posting its expenses online in February, 2009.^[39]

Government tools[edit]

The State of Rhode Island maintains its own transparency portal, which contains links to the FY 2009 financial records and personnel statements of fifteen government departments. These individual Transparency Portals can be accessed via the links below.^[40]

The following table was helpful in evaluating the level of transparency provided by the Transparency Portal:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
RI Transparency Portal	Y	Y	Y		Y	N

• Department of Children, Youth and Families Find out how much of CYF's $240,913,187.11 FY 2009 expenditures went towards residential services, foster care payments, and subsidy programs for state dependents and delinquents.
• Deparment of Health Analyze three major components of DOH's $76,983,162.37 FY 2009 budget: pharmaceuticals, training consultants, and medical supplies.
• Office of the Adjutant General/Military Staff See how much money was spent on building renovations and improvements, renting outside properties, and fuel by the Office of the Adjutant General/Military Staff.
• Department of Public Safety Find out how much the DPS spends on State Police retirement pensions, construction in progress, and military supplies.
• Department of Education In FY 2009, RIDE spent $942,454,306.39 on projects such as education and community aid, teacher retirement pensions, and scholarships, loans, and grants.
• Department of Corrections DOC expenditures for FY 2009 totaled $214,932,485.49, with large portions spent on medical care and pharmaceuticals, building maintenance and repair, and ISF overhead/service charges.
• Department of Revenue Look at DOR expenditures on lottery commissions, postage and postal services, and contruction in progress.
• Department of Elderly Affairs The DEA was responsible for public transit transfers, grants, and other financial services for the elderly.
• Department of Business Regulation The Rhode Island Department of Business Regulation spent $9,753,489.88 in FY 2009, including large expenditures on actuarial financial services, postage and postal services, and management consultants.
• Department of Labor and Training Much of the DLT's FY 2009 expenditures went towards non-state SDA payments, municipal police and fire pensions, and non-taxable claims, settlements, judgments, and torts.
• Department of Environmental Management Find out how much the DEM spends on land, renting outside property, and environmental services.
• Department of Transportation Major expenditures in the DOT FY 2009 budget included transfers to the Garvee Fund, infrastructure maintenance and improvement, and transfers to the Economic Public Transit Authority.
• Office of the Governor See how much of the Office of the Governor's $4,943,911.60 FY 2009 budget went into ISF overhead/service charges, office supplies and equipment, computers, and telephones.
• Department of Administration The DOA spent $791,990,050.26 in FY 2009, large portions of which went towards appropriated aid, medical claims and premiums, and transfers to the RI Convention Center Authority.
• Office of the General Treasurer Find out how much the Office of the General Treasurer spent on refunds and bad debt, non-taxable and taxable claims and settlements, and renting outside property in FY 2009.

See also: Evaluation of Rhode Island state website

Economic Stimulus Transparency[edit]

• The state would receive approximately $209 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[41][42]

• Rhode Island was to receive an estimated $697,905,208 from the American Recovery and Reinvestment Plan of 2009.^[43]

• Pennsylvania established an economic recovery website to show how legislators and government officials in Rhode Island were spending Federal funds.^[44]

Independent transparency sites[edit]

The Ocean State Policy Research Institute had launched a transparency website that provided access to a variety of websites designed to present public information in a Google-style searchable format.^[45]

The Ocean State Policy Research Institute had also recently established RI Stimulus, a transparency website dedicated to tracking the federal stimulus money coming into the state. RI Stimulus Watch provided users with information on all public projects being funded by the federal stimulus money and allows the public to vote on whether or not they support each project, as well as to post comments. Projects can be sorted by cost, location, and most/least critical (based on user ratings).^[46]

In addition, the Ocean State Policy Research Institute was developing a site dedicated to transparency in public school spending.

Public employee salary information[edit]

The Providence Journal was conducting a report on public payroll in Rhode Island.^[47]

The Ocean State Policy Research Institute's existing independent transparency site also contains salary data for employees of the state and municipality over the last two years.^[48]

The Rhode Island Statewide Coalition Foundation's new independent transparency site contains salary data for employees of the state and municipality over the last two years.^[49]

Government transparency site[edit]

The State of Rhode Island maintains its own Transparency Portal, which contains links to the FY 2009 financial records and personnel statements of fifteen government departments. These individual Transparency Portals can be accessed via the links below.

• Department of Children, Youth and Families Find out how much of CYF's $240,913,187.11 FY 2009 expenditures went towards residential services, foster care payments, and subsidy programs for state dependents and delinquents.
• Deparment of Health Analyze three major components of DOH's $76,983,162.37 FY 2009 budget: pharmaceuticals, training consultants, and medical supplies.
• Office of the Adjutant General/Military Staff See how much money was spent on building renovations and improvements, renting outside properties, and fuel by the Office of the Adjutant General/Military Staff.
• Department of Public Safety Find out how much the DPS spends on State Police retirement pensions, construction in progress, and military supplies.
• Department of Education In FY 2009, RIDE spent $942,454,306.39 on projects such as education and community aid, teacher retirement pensions, and scholarships, loans, and grants.
• Department of Corrections DOC expenditures for FY 2009 totaled $214,932,485.49, with large portions spent on medical care and pharmaceuticals, building maintenance and repair, and ISF overhead/service charges.
• Department of Revenue Look at DOR expenditures on lottery commissions, postage and postal services, and contruction in progress.
• Department of Elderly Affairs The DEA was responsible for public transit transfers, grants, and other financial services for the elderly.
• Department of Business Regulation The Rhode Island Department of Business Regulation spent $9,753,489.88 in FY 2009, including large expenditures on actuarial financial services, postage and postal services, and management consultants.
• Department of Labor and Training Much of the DLT's FY 2009 expenditures went towards non-state SDA payments, municipal police and fire pensions, and non-taxable claims, settlements, judgments, and torts.
• Department of Environmental Management Find out how much the DEM spends on land, renting outside property, and environmental services.
• Department of Transportation Major expenditures in the DOT FY 2009 budget included transfers to the Garvee Fund, infrastructure maintenance and improvement, and transfers to the Economic Public Transit Authority.
• Office of the Governor See how much of the Office of the Governor's $4,943,911.60 FY 2009 budget went into ISF overhead/service charges, office supplies and equipment, computers, and telephones.
• Department of Administration The DOA spent $791,990,050.26 in FY 2009, large portions of which went towards appropriated aid, medical claims and premiums, and transfers to the RI Convention Center Authority.
• Office of the General Treasurer Find out how much the Office of the General Treasurer spent on refunds and bad debt, non-taxable and taxable claims and settlements, and renting outside property in FY 2009.

See also[edit]

Rhode Island government sector lobbying

Rhode Island state budget and finances

Rhode Island public pensions

Rhode Island state government salary

External links[edit]

Additional reading[edit]

• The Providence Journal, "No hunger pangs in the State House," April 1,2009
• State of Rhode Island, "Governor Launches Small Business Stimulus Package," December 11,2009
• Gov. Carcieri, "FY 2010 Governor's Budget," accessed April 19,2009
• East Bay Rhode Island, "Governor’s plan pulls $1.1 million from town and schools," December 16, 2009

Footnotes[edit]

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