A Burning Ring of Revenue Fire
One thing to remember: Every time you read about state tax revenue lagging expectations, the expectations have likely already been downgraded since the last time analysts were disappointed:
Two reports issued Tuesday afternoon by the state Revenue Analysis Office showed total state revenue in July and August was down 4.2 percent from the same two months last year, after adjusting for money collected in one year that is accounted for in the previous year.
Besides trailing last year, the revenues for July and August also trailed what state budgeters projected would come in. The shortfall is $12.8 million or 3.3 percent.
I don’t know if we can afford to wait until the next election to replace the legislators who’ve brought us to this impasse. Here’s a fantastic, small-scale example of the incompetence at work:
The cigarette tax collection is trickier to figure out.
The amount of money taken in during July and August is ahead of last year, $23.5 million compared with $20.5 million. But that is far less than what lawmakers budgeted: $26.3 million.
They looked for the increase because the state raised the cigarette tax by a dollar — to $3.46 a pack — in April, toward the end of the last budget year.
Simmons said that budget makers may have underestimated how much the tax hike would decrease consumption of cigarettes that are taxed in Rhode Island.
So, the legislators increased this tax 40% in the hopes of increasing revenue 28%, and thus far they’ve realized 15%. During the summer, when smoking tourists are trapped and aren’t likely to waste their valuable vacation time searching for deals across the border (or quit altogether).
The governor’s staff proposed this particular tax hike, and one hopes they’re duly embarrassed. Ultimately, however, the budget was reconfigured in the General Assembly’s name.
Whoever’s to blame, anybody looking for an economic turnaround in Rhode Island shouldn’t put their chips on the table until well after just about every other state in America has already been humming along for quite some time.