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Providence Business News op-ed
Chicken Little and the elephant in the room: Is the revenue sky really falling?
As we approach the end of the 2017 General Assembly, there remain looming fiscal questions that will require the right balance of prudence and courage, and an understanding of the political and economic forces in which Rhode Island finds itself.
With the release of each monthly revenue update, the fate of some of the more ambitious budget proposals advanced by the governor and legislative leaders seem less certain. The May Revenue Estimating Conference revealed a revenue shortfall of about $60.1 million for the current fiscal year, and a shortfall of $39.5 million for fiscal 2018.
While those projected shortfalls are significant, and appropriately give our elected officials pause as they consider this year’s budget proposals, it is important to keep these figures in perspective. They represent revisions of just 1.6 percent and 1 percent, respectively, of previous revenue projections.
It’s important to recognize that Rhode Island is far from unique in facing fiscal challenges. The Center on Budget and Policy Priorities noted in a paper released at the end of March that “all told, two-thirds of the states are facing or have addressed revenue shortfalls this year, next year, or both.”
In neighboring Connecticut, they are facing a $394 million revenue shortfall this year (2.2 percent of general-fund revenue), followed by a 12.8 percent shortfall in fiscal 2018. Massachusetts has a $462 million revenue shortfall this year (1.8 percent of general-fund revenue).