State Budgets: Rhode Island Determined to Keep Spending While Studying Reforms

Gov. Don Carcieri (R) has proposed a series of funding reductions for local government and health care cuts to close a budget shortfall estimated to be $366 million this year (out of $3.40 billion) and $486 million next year (out of $3.27 billion). Contributing to the large shortfall is a determination not to cancel over $570 million in capital projects spending and even to expand it, a new state loan program for small businesses, and a recent court ruling limiting Gov. Carcieri’s ability to lay off state employees. On the other hand, Carcieri recently negotiated greater freedom to spend federal Medicaid dollars, is studying broadening the sales tax while lowering the rate and new transportation funding options, considering options to address chronic state overspending, and has pledged not to raise taxes or eliminate a new optional flat income tax.

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