Gov. Raimondo, Speaker Mattiello await word on a new, possibly lower, state revenue estimate

Providence Journal (RI)

May 10--PROVIDENCE, R.I. -- Today is the day the top financial advisers to the legislature and governor will come out with a new -- and potentially, much lower state revenue estimate -- that will make it that much harder for everyone at the Rhode Island State House to get everything they want in the new state budget.

Governor Raimondo is pitching two years of free state-college tuition, with a first-year start at the Community College of Rhode Island only at an estimated cost of $10 million. House Speaker Nicholas Mattiello made a campaign promise to repeal the hated car tax over five years, at a potential first-year cost of $40 million.

Each and every state lawmaker has his or her own list of tax-and-spending priorities. Those priorities can include funding for their home-district Little League teams or more expensive initiatives such as a proposed $500,000 appropriation to promote the state's craft beer industry and a multi-million-dollar reduction in the income-tax on retiree income.

All signs point, however, to significantly less revenue than Democrat Raimondo had reason to anticipate when she proposed a $9,248,062,696 tax-and-spending plan to lawmakers in January.

Her proposal was premised on the best guess of the state's revenue-estimators in November, and it assumed a $309.8 million year-over-year increase in available state and federal revenue.

That no longer appears likely. And recent media reports indicate that Rhode Island is not alone, as states across the nation -- including Massachusetts -- grapple with revenue shortfalls attributed, in part, to corporate uncertainty about the direction that President Trump and the GOP-led Congress are heading with tax cuts and spending.

Here's one theory, advanced in a recent Boston Globe story: businesses are pushing profits into future years on the hope that Trump's team will as promised produce the "the biggest individual and business tax cut in American history."

"The mere prospect of falling tax rates has already started changing people's behavior, encouraging them to hold stocks a bit longer or claim their income a bit later. And that's wreaking havoc across state budgets, including in Ohio, Connecticut, and Pennsylvania," the Globe reported.

A recent Center on Budget and Policy Priorities report carried this headline: "33 States Face Revenue Shortfalls in 2017 and 2018."

Massachusetts tax revenue came in far below expectations in April, destabilizing the already precariously balanced $39 billion state budget and raising the specter of additional cuts to government services.

With Massachusetts collecting 2.2 percent less tax money than expected, authorized spending may exceed actual revenue by almost half a billion dollars, the Globe reported. That would leave Bay State Governor Charlie Baker with a big budget hole to fill before the fiscal year ends, as Rhode island's does in June.

And the drop off is likely to ripple into the new budget year which begins on July 1. Baker budget officials said they will work with state agencies to figure out a way to bridge the gap, according to the Globe.

In Rhode Island, Democrat Raimondo is awaiting the results of the Revenue & Caseload Estimating Conference that ends Wednesday. But the warnings of a potential shortfall have been mounting.

Unlike the previous six years when tax collections exceeded estimates at this point in the year, an end of March report painted this picture: revenues were $27.3 million, or 1.3 percent, behind the estimates developed in November and used by Raimondo to build her state budget proposal.

Rhode Island taxpayers may rejoice at one of the complications: tax refunds are going out at a much faster clip than they did last year, when refunds were inexplicably held up for months.

The total dollar amount of the tax refunds issued so far this year -- $227.1 million -- is at a five-year high, according to state tax officials. At $572.21, the average refund so far this yer, is also at a five-year high.

At the same time revenue collections have dropped, the state has been beset by a series of costly problems.

The state and federally financed Medicaid program that pays the doctor and hospital and nursing home bills of 295,908 low-income Rhode Islanders is running $28.6 million over Rhode Island expectations for this year, in part because there are as many as 21,500 ineligible people on the state's Medicaid rolls.

The core problem: the launch in mid-September of a trouble-plagued new $364-million public-assistance benefits computer system -- known as UHIP -- that led to overpayments, underpayments, non-payments and, at its worst point, more than 14,000 backlogged applications for food stamps and other critical benefits.

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