Rhode Island’s Retrograde Fiscal Culture, the Saga Continues
The state’s budget situation looks bleak, real bleak.As was also the case last year, our neighbors in Massachusetts and Connecticut are not experiencing similar crises. The State Comptroller of Connecticut is projecting a surplus for for fiscal year 2007?
The amount of cash flowing into the state’s coffers this year is estimated to fall $74.2 million short of previous predictions, causing a major headache for all branches of state government.
To further exacerbate the problem, a report due out later this week is expected to show that department spending is far above what has been budgeted. Those added expenses could push the current year deficit well above $100 million, according to state Budget Officer Rosemary Booth Gallogly.
State Comptroller Nancy Wyman today projected the state will end the 2007 fiscal year with a budget surplus of $266.4 million.And while Massachusetts does not provide a comprehensive monthly forecast including both revenues and spending like Connecticut does, according to the Massachusetts Department of Revenue, as of October’s collections, revenue collection by Massachusetts is very slightly ahead (about $16,000,000 out of a total of $18,900,000,000) of what was anticipated.
The estimated surplus increased by $53.5 million over the last month. That growth was mainly due to higher-than-expected revenue from the income tax, especially the capital gains portion of the tax related to investors’ robust returns from the financial markets. Modest job growth of about 1,700 positions in September also produced higher revenue from the payroll-withholding portion of the tax.
Unsurprisingly, the fundamental problem facing Rhode Island has not changed from a year ago…
The fact that our neighbors doing well shows that the Rhode Island budget shortfall is not a problem created by implacable macroeconomic forces spiraling out of control; economic conditions in Rhode Island are similar to economic conditions in Massachusetts and Connecticut.
Rhode Island’s problems are rooted in poor fiscal management and irrational spending policies. They cannot be solved by giving even more money to the government that created this mess in the first place.