Welcome to the Governor-Elect's Budget Summit

Good morning, from the Sapinsley Center on the campus of Rhode Island College, where I will be liveblogging Governor-Elect Lincoln Chafee's budget summit this morning:

Governor-Elect Chafee offers opening remarks:

First priorities are education, state-aid and Central Falls

Deficit for next year as high as 300M

There are 2 columns in any budget, revenues and expenditures.

Mentions “revenue enhancement” (the sales tax) could be as high as 120M. Still leaves a big gap.

Did 7 budgets as Mayor of Warwick, and it’s never an easy process.

[8:48] Over to Rosemary Booth Gallogly, Director of Dept. of Administration:

Revenues are growing much faster than expenditures. About a 450M gap projected for FY2016.

Impact of ARRA (stimulus) loss will be that $215M of human services disappears, 18M of education funding will disappear.

Revenues have dropped from 3.4B to 3.0B between FY2008 and FY2010. All sources of revenue were down.

Income tax is largest source of revenue. Gambling revenue has been fairly flat, for the past three years.

[8:53] Hmmmm. Various sales tax trends are noted, including loss of sales-tax revenue due to e-commerce. Gallogly mentions this can only be “fixed” by Congress.

[8:54] 300M coming in from gambling revenue, it’s been flat (which is better than down) since FY2008. Casinos in Massachusetts are a threat, one estimate is a 27% reduction.

Table games could increase revenues by 26%, even with Mass casinos (according to a Twin River estimate).

[8:56] Discussion of “tax-expenditures”. They’re hard to track, since the government is not collecting anything once they are enacted. Various estimates come with their own “reliability index”, which should be taken into account, before any actual decisions are made.

[8:59] Ranking of expenditures in the total budget (Federal + Stste): 1 Assistance and grants, 2. Salary and benefits, 3 Aid to local units, 4 Operating expenses.

[9:03] General revenue only, FY2012 debt service rises to 4th place.

[9:04] Ranking of expenditures by function: 1. Human services, 2. Education, 3. General Government.

[9:05] Gallogy emphasizes that Transportation is only 5% of the state budget.

[9:08] In 2012, expenditure growth is projected to be 12%, mainly due to loss of stimulus funds.

[9:09] 1701 fewer state-worker positions filled, compared to 2002. About 1,300 persons retired in 2008, coincident with a set of pension changes.

[9:13] For FY2012, 41.3% of payroll must be budgeted for, for pension, FICA, retiree health and “assessed fringe” costs.

[9:15] Personnel costs will rise about 6% in FY2012, due to concessions that are (expired? Not carried forward? Just aren’t there?)

[9:16] We are one of a few states that issues bonds to get its Federal highway match.

[9:17] Big increase in debt-service, due to historic tax-credits between now and FY2016, from about 18M to 51M.

[9:20] “In the current year, we seem to have things under control. Next year is a huge, huge challenge.”