Expense Side Concerns

Date: May 14, 2014

While the Senate Finance Committee approved a plan to create a new “statewide transportation infrastructure fund” and eliminate the controversial toll on the new Sakonnet bridge between Portsmouth and Tiverton, the General Assembly faced new expenses as well. With unexpectedly large numbers of low income residents signing up for health care coverage (35,000 more than expected and growing), the state likely will incur $50 million more than expected in health care costs. Under the new projections, Rhode Island’s total annual spending on Medicaid will increase from $1.6 billion in the 2012-13 budget year to $2.3 billion in 2014-15, a 40% increase in just two years. The number of people on Medicaid totaled 246,193 last month, up from 198,085 a year ago. Medicaid spending already makes up nearly 30% of Rhode Island’s entire $8.2-billion state budget

In addition, the state of Rhode Island, like many states, is experiencing a downturn in revenues from the state’s income tax. And the state is concerned about taking over the cost of running a state health care exchange HealthSource RI -- $20 million plus annually – from the federal government. Finally, lawmakers are more than a little worried about the revenue impact of the advent of legalized gaming in Massachusetts with some estimating the loss of revenue at $100 million or more annually.    

These financial realities are challenging to us and to our legislative allies who are drafting a state budget and want to include tax reductions in that spending blue print. House Finance Chairman Gallison expressed his concern about increased budget pressures. But Rhode Island needs to encourage economic growth and new jobs.   

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