Revvvvenue! Analysts say RI is $300M+ better off than it appeared last fall
Rhode Island, like many state governments emerging from the COVID-19 pandemic, is flush with cash.
Even before accounting for the more than $1 billion in federal pandemic aid, state fiscal analysts on Monday revised state revenues upward for this year and next by more than $300 million.
That means lawmakers will have more money to spend on favorite causes, cut taxes or sock away for the future when they meet to pass a budget next month.
In a joint response to the new revenue numbers, House Finance Committee Chairman Marvin Abney and Senate Finance Committee Chairman Ryan Pearson said they "welcome today's results as further evidence that Rhode Island is recovering from the health and economic crises brought on by COVID-19."
"The improved revenue forecast will give the General Assembly more flexibility to pass a balanced budget prior to the July 1 start of the fiscal year that continues to provide critical government services," they wrote.
The good news included estimated revenue for the year ending June 30 to come in $177 million higher than projected last fall.
And revenue for the year beginning July 1 was bumped up $147 million from last year's estimates.
Where is all the money coming from?
Collections from the state's largest revenue sources this year are now expected to come in well ahead of earlier projections, including personal income tax up $90 million, sales tax up $79 million and lottery revenue up $34 million. The exception was corporate taxes, which were estimated to come in $37 million short of previous estimates.
Looking ahead to next year, analysts increased personal income tax estimates by $96 million, sales tax by $42 million and lottery revenue by $19 million.
The new revenue estimates were finalized the same day the U.S. Treasury Department released new guidance on how governments can spend the $350 billion in state and local aid contained in the American Rescue Plan. Rhode Island is set to receive $1.78 billion, with the state getting $1.1 billion and the remainder divided among municipalities. (Providence can expect around $166 million.)
A broad array of uses for the funds are allowed, according to a Treasury release, including lost tax revenue.
“With today’s release of federal guidance on allowable uses of the state’s American Rescue Plan (ARP) funding, we fully expect the broader effort to identify the specific investments for these funds will extend beyond June," Pearson said. "Our respective committees will gather and consider ideas and proposals from all Rhode Islanders. We are pleased the Rhode Island Foundation and Governor McKee are soliciting proposals to present to the Assembly for consideration through an open and public process. We are committed to getting these long-term decisions right, and doing that will take time and deliberation.”
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