RI tax revenue expected to exceed forecast by $580 million over 2 years
PROVIDENCE, RI (WPRI) – Experts on Monday predicted a huge increase in Rhode Island’s projected government revenue over the next two years, even as legislative leaders warned that part of the reason for the revenue surge is record inflation which will have other budgetary effects.
Calculators who participated in the semi-annual revenue estimate conference project that state revenue is expected to be $387 million higher in the current 2021-22 fiscal year — and $193 million more in the next fiscal year 2022-23 – compared to what they projected when they last met, in May.
This combined $580 million in newly identified tax revenue is separate from the more than $1 billion the state has received from the U.S. Federal Bailout Act, as well as additional funds from the bipartisan Federal infrastructure.
The wrap-up of May’s revenue meeting kicks off the always frantic closing weeks of the General Assembly session, as Rhode Island’s legislative leaders finalize a budget, their biggest undertaking of the year. . A new budget is drawn up for each fiscal year, which runs from July 1 to June 30.
The two lawmakers responsible for the Rhode Island budget — House Finance Committee Chairman Marvin Abney and Senate Finance Committee Chairman Ryan Pearson — warned their colleagues to think twice before assuming that all additional income will be freely available to be spent.
“We are pleased that revenue estimates continue to exceed forecasts; however, we must remain mindful of what these increases represent,” Abney, D-Newport and Pearson, D-Cumberland, said in a joint statement.
“Most of the incremental revenue comes from increased income tax and sales tax revenue, reflecting rising wages and rising prices,” the two presidents continued. “The state budget is also impacted by these economic trends, as the cost of buying and delivering goods and services is also increasing at rates higher than what the current budget is funding.”
“As we consider the many proposals before us, we will work to ensure the best use of one-time and ongoing resources to maintain a robust and sustainable recovery,” they concluded.
Governor Dan McKee proposed a $12.8 billion budget plan in January that includes a plan to spend the unprecedented influx of federal funds from ARPA. At a candidate forum last week, McKee suggested state leaders could consider using the higher revenues to cut the sales tax from 7% to 6.25%, bringing it into line with others. States.
Senate President Dominick Ruggerio previously suggested using the revenue to eliminate the municipal car tax a year ahead of schedule.
New numbers agreed at Monday’s draft revenue estimate conference Rhode Island state revenue will rise 14% in the current 2021-22 fiscal year to $5.07 billion , up from $4.44 billion in 2020-21. But it’s actually expected to decline from there in 2022-23, falling to around $4.95 billion, a 2% decline.
The governor and legislators are required by law to use the Revenue Estimates Conference forecast when setting the state budget.