Report highlights need to pull back on COVID-era spending

PROVIDENCE, R.I. (WLNE) — Gov. Dan McKee submitted his proposed budget for fiscal year 2024 in January. Now, a report says his proposed budget is “dramatically” higher than five years ago.

“The governor’s FY 2024 budget appears to be the last of a series of flush state budgets fueled by enormous allocations of federal pandemic funding and very large general revenue surpluses,” said Michael DiBiase, president and CEO of the Rhode Island Public Expenditure Council.

The council’s report, released Wednesday, indicates that McKee’s proposed budget signals the start of more “constrained revenues forecasted for the next several years.”

DiBiase said that the pandemic-related federal funding in Rhode Island will be running out and the state’s general revenue growth will be “considerably more constrained.”

“Policymakers will need to avoid unsustainable spending commitments and be prepared to curtail the level of spending growth,” he explained.

DiBiase said that revenue growth will keep being constrained at an average annual growth rate of 2.5% between FY 2024 and FY 2028.

This increase, said DiBiase, “significantly” falls behind the pre-pandemic average annual growth rate of 3.5% — which he added is dramatically lower than the FY 2019 through FY 2023 growth rate of 6.6%.

On the other hand, McKee was praised in the report for several of his proposals to provide tax relief to residents and make the Ocean State more competitive.

The Democrat’s budget proposal also aims to improve the state’s fiscal position and enhance the economy, said DeBiase. In addition, the budget proposal addresses the school funding formula — which hasn’t been used as intended over the last two fiscal years.

In the report, the Rhode Island Public Expenditure Council made recommendations based on its findings, including reconciling state education aid consistent with the funding formula, improving business tax climate, and avoiding spending commitment beyond available resources.

Click here to read the full report.