When the Good Times Aren’t So Good, What Will the Bad Times Be Like?
Elizabeth Gudrais has an article in today’s Projo on the National Conference of State Legislatures’ annual state budget survey ($$ required to view the original). This year’s study ranks Rhode Island #1 in the country in terms of tax increases between this year and last. The Projo article contains none-too-surprising reactions from the usual suspects; House Finance Chariman Steven Costantino says the NCSL methodology is flawed, Gary Sasse of the Rhode Island Public Expenditures Council says that Rhode Island’s poor fiscal condition is because other areas of the budget are being starved to pay for entitlement spending, and Ellen Frank of the Rhode Island Poverty institute says the message from these kinds of reports is that Rhode Island needs to find new ways to raise taxes.
However, in terms of planning for the future, the most important feature of the NCSL study may be its warning that we’ve been living through good times that are about to come to an end…
Of the 45 states that have already reported, 23 ended fiscal 2007 with surpluses equaling 10 percent or more of state general-revenue spending, due in many cases to higher-than-expected revenue receipts. Many states were able to increase their reserve funds — Tennessee, for example, by more than $200 million…[but] for other states, the boom times appear to be coming to an end. The NCSL report fingers fiscal 2006 as “the peak for state fiscal health this decade.” On average, the report says, the growth in state surpluses and higher-than-budgeted tax collections are slowing down.If the forecast is accurate, fixing the structural problems in Rhode Island budget is not something that can put off for much longer.