Underestimating Underperformance

I’m sorry to say that my $150 million guess, back in the late spring, at the November Revenue Estimating Conference’s projected budget shortfall was far short. From the governor’s office:

Governor Donald L. Carcieri today issued the following statement regarding the Revenue Estimating Conference’s revised projection of state revenues for the current fiscal year. State revenues will fail to meet the enacted revenue estimate of $3.347 billion with an estimated revenue shortfall of $233.6 million. This revenue shortfall is in addition to the $37.4 million deficit from fiscal year 2008, $10.0 million for the Station Nightclub settlement, $18.7 million for changes in federal reimbursements to DCYF, $36 million more in expected state costs as a result of the Caseload Estimating Conference, and $37 million in other projected spending. The estimated deficit for FY 2009 now totals approximately $372 million.
“We expected revenues to be down due to the current economic climate, but we did not anticipate the shortfall would be this great,” Governor Carcieri said. “The gravity of the situation is going to require more dramatic steps. We have already made significant reductions in personnel costs and human service and social welfare programs, while attempting to minimize the impact on funding for cities and towns.
“Anticipating a drop in revenues, my staff has been meeting for the past several weeks to develop plans for closing the budget gap. Proposals are still being finalized, but the areas of focus include a reduction to local aid, state pensions, review of all state contracts and assets, program reductions, and a revision of revenue policies.”
“Next week, I will look to meet with House and Senate leaders to review proposals and develop plans to address our current fiscal crisis. We simply cannot afford to wait to address our economic situation. Now is the time for everyone to work together, and may require the General Assembly to take immediate action.
“For too long, the State has promised more to its residents than the revenue system can provide. These structural deficiencies are only exacerbated by economic downturns, placing the State in its current position. While we must find a solution to the immediate situation, we must also look to make structural changes to how the state and local governments raise revenues and deliver public services.”
“We were able to accomplish a lot last year, without raising broad-based taxes. If we are to successfully reposition Rhode Island’s economy for the future, we will need to make difficult choices now. These difficult choices will include reexamining the breadth of government services provided. Working together with the General Assembly, and our cities and towns, we can come through this recession as a stronger and leaner government,” concluded the Governor.

That’s 11% of the total budget as a shortfall. Anybody want to stake out a number for the actual number come the spring? Is this the year that Rhode Island reaches a $1 billion deficit?

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Mike
Mike
12 years ago

Not a billion but easily half that. This is the natural result of “progressive” government. You tell the most productive, educated, creative people to “screw” and you say “welcome” to illegals, moochers and public tit suckers and this is what you get.
The real RI Future is being played out in California. One major city (Vallejo) is already bankrupt and others are on the verge. The RINO governor has just cut a deal with the “progressives” to raise the sales tax to 10.25%. No misprint-that’s Ten and a Quarter percent. It is however promised as a (not making this up) TEMPORARY measure. As here, the people deserve what they get for putting neo-comms in office. The Seekonk Chamber of Commerce is already salivating.
http://latimesblogs.latimes.com/lanow/2008/11/la-sales-tax-wo.html
Gov. Arnold Schwarzenegger is expected to unveil a plan today for a steep sales tax increase and deep cuts in services to wipe out a budget shortfall that is expected to swell to more than $24 billion by the middle of 2010, according to Capitol staffers with knowledge of the proposal.
The linchpin of the governor’s plan is the sales tax increase of 1 1/2 cents on the dollar, which could raise more than $10 billion through fiscal 2009-10. Such a tax is likely to face resistance from Republicans, who blocked a smaller increase proposed by the governor last summer and have vowed to continue to do so.
Sales tax in Los Angeles would shoot up to 10.25% if the governor’s newest plan were to be approved. That would include a half-cent sales tax hike that Los Angeles voters apparently passed on Tuesday to fund transit projects. The statewide sales tax rate is 7.25%.
The governor’s proposal also includes cuts of several billion dollars to schools, healthcare programs and law enforcement.

Roland
Roland
12 years ago

Mike, you should also mention that the Governor of California also refused to address, even though he acknowledged, the $14B sucking sound called illegal aliens. I recall an article written about six months ago saying that everyone was now welcomed and kicking out illegals wasn’t the answer to the estimated $14B deficit.
And here we now face the very same disconnected House and Senate now that they all attached themselves to Paiva-Weed’s butt like leeches.
Don’t we all expect the House and Senate to now refute the wisdom of cutting social programs when it is needed most? Their thoughts, not mine.
I thank God every night for a Republican Carcieri. Can you imagine where we would be if Montalbano or a Cicilline were our Governor?
We need to support the Governor’s social entitlement program cutbacks and kick out EVERY SINGLE illegal alien out of this state and this country while not strangling the honest, hard working, not teat dependent American with higher taxes like Governor Puff Daddy of California.
Will it solve all the state’s problems? NO.
Then again, it’s a start.

John
John
12 years ago

Do none of you people here at AR get it? Why do you think Bill, Gordon, Steve, Theresa, etc. blithely skipped the Gov’s economic summit? Because they know. They know that in the long run, RI will be better off forcing out troublemakers who might vote against them. And they know that this election was probably the nail in the coffin. Even if voters beg Laffey to run in 2010, there’s not a snowball’s chance in hell he could get a majority in the GA, or even enough Republican victories to sustain a veto. It would be Carcier all over again if Laffey wins. So people who can are leaving, in ever increasing numbers. But to the state’s Democratic leaders, it doesn’t matter. Let them go. Who needs them. Tax the suckers who are so besotted with the state that they decide to tough it out. And count on Jack, Patrick, Jimmy and Sheldon to get us the money we need to keep this game going. We’ll screw the cities and towns — let them declare bankruptcy. Because who loses? Suburban voters — they were never our people, after all. We’ll find a way to jack up their property taxes (c’mon, Theresa). And maybe we’ll roll the local pensions into some bigger state plan. We’ll keep this thing going. Our Congressional delegation is going to make that possible. After all, Obama’s in the White House, and what state is bluer than RI? Right? How can a plan like that go wrong? Who needs to talk about economic development, or radical change? We’re just going to wait around for lightening to strike again (call it Tobacco bonds phase 2 — too bad about the lead paint thing, but, hey, we tried…). Nothin’ to worry about. See you at the CG or… Read more »

John
John
12 years ago

Do none of you people here at AR get it? Why do you think Bill, Gordon, Steve, Theresa, etc. blithely skipped the Gov’s economic summit? Because they know. They know that in the long run, RI will be better off forcing out troublemakers who might vote against them. And they know that this election was probably the nail in the coffin. Even if voters beg Laffey to run in 2010, there’s not a snowball’s chance in hell he could get a majority in the GA, or even enough Republican victories to sustain a veto. It would be Carcier all over again if Laffey wins. So people who can are leaving, in ever increasing numbers. But to the state’s Democratic leaders, it doesn’t matter. Let them go. Who needs them. Tax the suckers who are so besotted with the state that they decide to tough it out. And count on Jack, Patrick, Jimmy and Sheldon to get us the money we need to keep this game going. We’ll screw the cities and towns — let them declare bankruptcy. Because who loses? Suburban voters — they were never our people, after all. We’ll find a way to jack up their property taxes (c’mon, Theresa). And maybe we’ll roll the local pensions into some bigger state plan. We’ll keep this thing going. Our Congressional delegation is going to make that possible. After all, Obama’s in the White House, and what state is bluer than RI? Right? How can a plan like that go wrong? Who needs to talk about economic development, or radical change? We’re just going to wait around for lightening to strike again (call it Tobacco bonds phase 2 — too bad about the lead paint thing, but, hey, we tried…). Nothin’ to worry about. See you at the CG or… Read more »

Will
12 years ago

Surprise! We’re in the crapper. Oh, it’s not a surprise, is it?
My educated guess for the spring estimate is over $500 million, but it’s not like it’s real money anyway. There is absolutely nothing left at this point to stop impending economic oblivion, other than a little luck. By the way, have you noticed how every estimate for the last few times know has been way off? You’d think they could modify their assumptions a bit to compensate, unless they really don’t know what they’re doing (which is hardly outside the realm of possibility).
Anyway, I’m really hoping that the Democrats use their newly enlarged majorities to force some big broad-based tax increases down our throats. It might finally give the GOP an issue to use effectively. Midterm elections tend to be better for the party out of power … and Lord knows, we have very little power. Of course, for those still left in Rhode Island, it would be very painful. I was really hoping the income tax repeal in MA would pass.
PS Of course, one of the fun things that could happen between now and the spring is that that one or both of our state’s psuedo-casinos will file for bankruptcy protection. You think we have problems now, just wait.
PPS If things keep going the way they’re going, me thinks the governorship will just be handed to Laffey, because no one else will want it by then. 😉

Patrick
Patrick
12 years ago

>>Midterm elections tend to be better for the party out of power<< Maybe, but in RI, there are no midterm elections. Every time we either have a presidential election or a gov's. So we do get the voters to flock every two years. If there was a time with no Gov and no Pres on the ballot, then the turnout might be low enough to change things. But that ain't gonna happen. >>If things keep going the way they’re going, me thinks the governorship will just be handed to Laffey, because no one else will want it by then<< Wishful thinking Will. You know that Cappy, Lynchie, Liz and maybe even Day-vid will be killing each other for that job. How many years now of Republican rule in the Gov's office? They'll claim that clearly that's the problem with the economy in RI. The Gov doesn't work with the Assembly. Vote for them and they'll work with the Assembly and get things done for RI. (Yeah, like continue to jack up taxes and continuing to encourage people to live and work here illegally).

Phil
Phil
12 years ago

The unemployment rate in R.I. is at it’s highest in fourteen years. That’s the number of years that the governors office has been occupied by a Republican. Governor Donald(Chuckles) Carcieri’s time in office is mirroring that of George W. Bush with the only difference being that only one of these inept partisans is leaving in January.
We will have to suffer through these difficult times with this right wing incompetent and ineffectual governor. Wind power seems to be the only positive initiative that he has had to offer the citizens of the state.

Ragin' Rhode Islander
Ragin' Rhode Islander
12 years ago

The closer the material is to finally disappearing down the crapper’s drain, the faster it circles … the closer Rhode Island is to disappearing down the drain, the larger the deficits.
This state is so screwed!

Chris
Chris
12 years ago

“We will have to suffer through these difficult times with this right wing incompetent and ineffectual governor.”
Yeah, that’s right Phil, blame our Republican Governor for this too. These “difficult times” surely had nothing to do with 70+ years of a Democrat-controlled General Assembly.

Monique
Editor
12 years ago

Nice try, Phil. That’s the beauty of one party dominance of a legislative-centric state. They don’t have to share the credit with anyone else.

Phil
Phil
12 years ago

All you people can say to me is “yes…but”. Chris and Monique can only cry about the General Assemby and not give one single example of an accomplishment of this governor. Forget political party for a minute and tell me anything this governor has done to help anyone except his well heeled friends in places like Avondale and Saundestown.

Frank
Frank
12 years ago

Carcieri single handedly fought off the day care worker unionizing effort that would have given this group state worker staus/benefits. That would have cost the taxpayers an estimated $10 million yearly at the time, an amount that surely would have grown. This was clearly a victory for the RI taxpayers. If not for this accomplishment we all would have been saddled with even more unnecessary government spending and an even larger budget deficit.

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