EDITORIAL

Fiscal picture brightens, but caution remains key

Posted 5/13/15

What has been a bleak fiscal picture for the state recently grew a bit brighter.

Word came on Friday that revenue projections are running significantly higher than anticipated, to the tune of $107 …

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EDITORIAL

Fiscal picture brightens, but caution remains key

Posted

What has been a bleak fiscal picture for the state recently grew a bit brighter.

Word came on Friday that revenue projections are running significantly higher than anticipated, to the tune of $107 million in additional funding for the current year and $37 million more for the coming year. The biggest jumps were seen in personal income tax and business corporations tax collections, which officials – including House Speaker Nicholas Mattiello and Senate President M. Teresa Paiva Weed – have quickly pointed to as a sign of economic stabilization and improvement.

Assuming those figures do not require substantial revision, and combined with social services expenses running roughly $30 million less than anticipated, state leaders will have more than $170 million more at their disposal over a two-year span.

Previous estimates have pegged the state’s projected budget deficit for the coming year at approximately $190 million, making the surplus funding particularly meaningful. As lawmakers finalize their review of Gov. Gina Raimondo’s budget proposal, the additional resources will provide an unanticipated level of flexibility.

The leaders of the General Assembly have already outlined several priorities. Paiva Weed has identified five specific objectives, including an exemption for small and new businesses from the minimum corporate tax rate, an increase in aid to cities and towns, and a boost in education and transportation funding. Mattiello is eying the elimination of the so-called “Taylor Swift tax” from Raimondo’s budget, and an expansion of tax breaks on Social Security benefits. The governor has spoken in support of expanding the earned-income tax credit.

We hope, as state leaders suggest, that the revenue projections do indeed represent an increasingly healthy local economy. It is important to remember, though, that some major structural hurdles remain, both in the short term and beyond.

Raimondo, in announcing her “JOBS budget,” spoke in stark terms about Rhode Island’s current position:

“If we rebuild this economy and create middle class jobs for Rhode Island families, everything is possible. And if we don’t, nothing else will matter. Our economic engine has run out of gas, and we have been in decline. Now is the time to spark our comeback.”

Our state, like so many places around the country, is still struggling to forge an effective economic identity for the 21st century. As the governor herself has made clear, there are no shortcuts to this process.

As our leaders work with newfound flexibility to finalize the coming year’s budget, we ask them to also keep their sights set on the years to come and to make their choices wisely.

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