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Rising expenditures, lower revenues fuel R.I.'s deficit

Despite attempts to balance the budget, Rhode Island's deficit is estimated at $219.8 million for the current fiscal year, according to an official memo from the State Budget Office last Friday.

That projection comes after the office held its semi-annual Revenue Estimating Conference Nov. 5 and 10. The conference, which by law must be held twice a year to update state revenue and spending estimates, attributed the deficit to a large drop in expected revenue and an increase in expenditures, both products of the economic recession, according to the memo.

Since the 2010 fiscal year began in July, Rhode Island has developed a revenue shortfall of $130.4 million, according to the budget office's findings. That was in part due to decreases in revenue of $64 million from the sales tax, $44 million from the income tax and $18.9 million from the business corporation tax. After accounting for $34.9 million in overspending and the $61.8 million deficit left over from the last fiscal year, the conference reached its $219.8 million estimate.

Last week, the Pew Center on the States released a report, "Beyond California: States in Fiscal Peril," that identified Rhode Island as one of 10 states headed toward economic disaster.

In a statement issued Nov. 10, Gov. Donald Carcieri '65 called the revenue forecast "poor," adding that the deficit proves that the state is "still in the throes of an economic recession."
Amy Kempe, the governor's spokeswoman, said in an interview that the deficit was not "unexpected," calling the large drop in revenue and spending increase "a direct result" of the recession.

The General Assembly sent a joint resolution calling on Carcieri to submit a plan to balance the budget by this week, Kempe said.

While the governor acknowledged in his statement that "there are more difficult decisions to be made," Kempe confirmed that the governor does not plan to meet that deadline.
"The joint resolution is not statutory," Kempe said. "There is no way to throw together a complete corrective plan in such short time."

In the statement, Carcieri said he plans to work on a budget plan with the legislature in the coming months and stressed that he does not support a tax increase.

"We must avoid raising taxes to solve this problem," he said in the statement. "This is not the time to ask Rhode Island families to pay even more of their hard-earned dollars to state government."

Kempe added that Rhode Islanders "need to tighten our belt" to cut expenditures before considering a tax hike.

A clear plan of action from the legislature will not be available until the General Assembly reconvenes in January. But the House Finance Committee announced last week it would hold a hearing Nov. 23 to further review the budget situation, according a Nov. 11 Providence Journal article.

"State and local officials may wish for a rosier picture," Carcieri said in the statement, "but as leaders, and stewards of our future, we have the very unpleasant but critical task of managing our way through what is the worst economic downturn since the Great Depression."
By statute, the governor has until Jan. 21 to submit a supplemental appropriations act to the General Assembly, Kempe said. 

 




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