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Surplus shrinks FY2014 deficit to $70M; long-term spending still a problem

December 12, 2012

A pre-session House Finance Committee meeting this afternoon offered a mix of good news and bad news: a larger than expected current-year surplus of about $47 million will roughly cut in half the deficit for the budget year starting next July 1, from $130 million to $70 million.

But the state’s structural deficit could grow to about $400 million in five years, due in part to overspending in some state departments. In an interview following the meeting, House Finance chairman Helio Melo said the state needs to be more disciplined:

“We need to as the time goes on to correct our ways of doing business of doing business, and making sure that we can come within our budgets and live within our means.”

A noticeably defensive state Corrections head A.T. Wall was mindful of the implied critique even before taking a seat to speak to the Finance Committee. Wall said the labor-cost intensive Corrections Department is at the mercy of unpredictable things, like an unexpected increase in prisoners in recent months. Dealing with that, he said, “is part of the mission.”

It also means that there’s really no flexibility in controlling the number of commitments or admissions, and limited flexibility about length of stay.”

Melo responded by saying Corrections should seek a refund from the department’s consultant that projects fluctuations in prison population. Wall responded to Melo’s response by saying the consultant’s projections have been extremely accurate since 1989.

Craig Stenning, head of the state Department of Behavioral Healthcare, Developmental Disabilities and Hospitals — known in budget-land as “Buddha” — also offered a defense of his department’s overspending. Stenning said curbing costs on a high rate of staff turnover is eluding the best efforts to trim expenses.

The Finance Committee meeting began with just six of the panel’s 16 members, including lame-duck Representative Jack Savage of East Providence, although a few more straggled in. At the end of the meeting, Melo toasted Savage for his work as a rep.

Richard Licht, state administration director, says Governor Lincoln Chafee plans to present his budget by January 17. The General Assembly resumes action on New Year’s Day.

3 Comments leave one →
  1. Craig O'Connor permalink
    December 13, 2012 12:35 pm

    Where we are wasting our money is on tax expenditures, huge tax breaks for companies who promises jobs and world peace, but deliver almost nothing. We need to end these tax breaks unless these companies prove they are creating what they said they would. We have tax expenditures on many things, and some make sense, but some don’t.

    Please see:
    1 – http://www.tax.ri.gov/reports/Tax%20Expenditure%20Reports/2012%20Tax%20Expenditures%20Report.pdf
    2 – http://www.economicprogressri.org/Portals/0/Uploads/Documents/Public/Tax_Facts_TER_2011.pdf

  2. Mister Guy permalink
    December 15, 2012 1:29 am

    “Wall said the labor-cost intensive Corrections Department is at the mercy of unpredictable things, like an unexpected increase in prisoners in recent months. Dealing with that, he said, ‘is part of the mission.’

    ‘It also means that there’s really no flexibility in controlling the number of commitments or admissions, and limited flexibility about length of stay.’”

    Unfortunately, the corrections union rails against time off for good behavior in prison as a potentially bad thing, while, at the same exact time, railing against having to take care of more & more prisoners. What a pointless exercise…

    Over the last decade or so, most RI state spending comes from “Human Services”, Education & “General Government” costs, while some personnel costs have been actually relatively flat over the last decade or so.

    In the “Human Services” category, RI unfortunately has less children on Medicaid (which are relatively “cheap” to care for) than the average U.S. state has and more disabled persons (which are very costly to care for) than the average U.S. state has, and “Home Community Care” costs (including prescription drugs, “Managed Care” & “Rhody Health”) are rising much too fast. RI state medical personnel-related costs are also rising too fast, even with less people on the payroll.

    In the education category, RI state costs on charter schools are rising too fast, while school housing aid & “Met School” costs are rising way too rapidly. Local services need to be consolidated, and RI localities need to be freer to set their own tax rates.

    RI state library and police & fire incentive pay needs to be cut, and state taxes on the rich need to go up significantly, since we’ve seen no significant economic growth from cutting those taxes. The entire RI state Senate needs to be abolished in favor of a unicameral legislature IMHO. The state also needs to negotiate in good faith with state employee unions to eliminate staff where necessary and trim employee retirement & health benefit costs over time.

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  1. The spending trend remains up, but the General Assembly cut $3M from its FY2012 budget « On Politics

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