Rhode Island ended the 2022-23 budget year with an even larger surplus than anticipated.
That may – or may not – be good news, given how much less the state actually spent on a long list of stated priorities than they budgeted for, from education to medical assistance to “homelessness infrastructure” to highway improvements.
In some past years, over-spending was the issue. Not this year.
State collected more in taxes, and spent millions less, than anticipated
Over-budgeting jumps out as a recurring theme in the newly released closing report issued by state Controller Dorothy Pascale for the fiscal year that ended on June 30..
The bottom line: the state collected $12.3 million more than anticipated in taxes and fees while spending $85 million less than budgeted when lawmakers passed – and Governor Dan McKee signed – the state’s spending plan for the year that ended on June 30, 2023.
The net result after a series of legally-required adjustments is that the end of year FY23 surplus, which is available for spending this year, is $29 million larger than legislative budget writers anticipated when they constructed the current year budget. But that’s not the big news.
The big news is the below-budget spending.
More:Political Scene: What do legislators want to do with RI’s $610M surplus?
What is the state not spending on?
Despite the big promises to address Rhode Island’s top-of-the-news housing – and homelessness – crisis, the “Housing & Community Development” arm of the state’s Executive Office of Commerce spent $76.5 million less than the $148.7 million in mostly federal dollars state legislators earmarked for:
- Development of Affordable Housing
- Homelessness Assistance.
- Site Acquisition
- Down Payment Assistance
- Workforce Housing
- Affordable Housing Predevelopment Program
- Home Repair and Community Revitalization.
- The statewide Housing Plan
- Homelessness Infrastructure
Asked to explain, Joseph Lindstrom, a spokesman for the Department of Housing, told The Journal: “The short answer to your question is that there is often a time delay between obligating funds to projects and the money going all the way out the door.”
“Regarding the homelessness programs you reference,” he said, “100% of the FY23 funding has been fully committed. Regarding the housing development programs with balances – development of affordable housing, workforce housing, and the community revitalization program – all of those funds (except for $2.5 million) have been obligated. “
He cited a May 2023 press release titled – “Governor McKee Announces Award of over $100M to Create Over 1,400 Units of Housing” – as evidence the seemingly unspent dollars have been earmarked. (It is not yet clear how many of these units are currently under construction.)
What other agencies under spent?
Housing was the eye-grabber, but it is not the only agency that under spent.
- The perpetually struggling Department of Human Services spent $16.9 million less than it was budgeted.
- The state’s multi-layered education bureaucracy – from grade school to college – spent $169.9 million less than the $2.1 billion that it was budgeted, though most of those unspent dollars were anticipated federal (not state) dollars. (On the elementary and secondary level, spokesman Victor Morente said the under-spending mostly involves federal “emergency relief” funds, available through 2025, that were budgeted “based on an estimate of how much local education agencies will request for reimbursement, made a year in advance.”)
- The state’s hospital agency only spent $1 million of the $7.3 million budgeted for the “buildings and campus” of the state-run Zambarano hospital in Burrillville. (A Department of Administration spokeswoman said work on two “major projects” was delayed, including renovations “in preparation for housing ventilator patients….currently receiving care in the Regan building on the Cranston campus…before renovations begin on the Regan building in Cranston.’]
- The legislature itself spent $12.5 million less than the $57 million it budgeted for itself.
What does it mean?
Big picture: the state ended FY23 on June 30 with a $410 million surplus. Of that amount, $369 million was anticipated and built into the $14.8 billion current year budget for the current fiscal year that began on July 1.
At first blush, that adds $41 million to the surplus, but state law mandates that any “excess revenue” – in this case, the $12.3 million – be split equally between the state retirement fund and the state’s Rainy Day Fund. Translated: The available surplus (vs expectations) is $29 million.
