The state budget surplus for the end of fiscal year 2012 exceeded estimates by $21.7 million, according to a report released by State Controller Marc Leonetti Aug. 30. But the surplus will have little impact on dismal out-year budget gaps projected at $103.6 million in 2014, a figure expected to more than quadruple by 2017.
"Revenue estimates are just that," said Christine Hunsinger, press secretary for Gov. Lincoln Chafee '75 P'14 P'16, who said differences between projected and actual surplus occur quite frequently.
"The (budget) office has a record of being fairly close," she said, adding that in the context of an $8 billion budget, returns of $21.7 million more than expected show that surplus estimates for fiscal year 2012 were fairly accurate.
Most of the extra surplus comes from an additional $14.7 million in personal income tax revenue and $4.4 million in sales tax. But some of that surplus was offset by shortfalls in other areas, including deficits of $8.4 million from corporate tax revenue and $2.5 million from cigarette taxes.
The end of the current fiscal year has a projected surplus of $32.7 million. When the projected surplus for 2013 and $93.3 million estimated surplus from 2012 are combined, nearly half the funds come from non-recurring savings and revenue, according to state House Fiscal Office budget analysis briefings. This means the 2012 and 2013 budget surpluses are not likely to continue.
The General Assembly's fiscal year 2013 enacted budget does not resolve out-year budget gaps, but includes initiatives to limit the detrimental impact on out-years using these one-time savings from 2012 and 2013, including reducing transportation debt, technology upgrades and rejecting some of Chafee's one-time revenue proposals that would raise certain taxes.
The state may reduce future deficits through other measures, like a tax amnesty program, Hunsinger said. The program offers incentives for past-due taxpayers to complete payments they owe during a 75-day period from Sept. 2 to Nov. 15. The state's Health Information Exchange program, which will allow for electronic transfer of medical records, is expected to reduce costs to the state in out-years once it begins, Hunsinger said.
But the most pivotal game-changer in combatting projected out-year deficits could be in the hands of voters Nov. 6. Nearly one-third of the budget gap projected for fiscal year 2017 is attributed to losses in gambling revenue, which brings in about $300 million to the state annually, Hunsinger said.
To reduce competition from Massachusetts, which is currently expanding slot parlors and casinos, November's ballot will include referenda that, if passed, would allow Twin River Casino and Newport Grand Slots Casino to offer table games. The addition of table games at Twin River could bring in an additional $60 million alone, said Larry Berman, spokesman for Rhode Island House Speaker Gordon Fox, D-Providence.
Past referenda in 1994 and 2006 to expand gambling in the state failed to pass, but the state's future financial uncertainty may be a deciding factor in the success of the measures this year. "Table games will help Rhode Island be more competitive with our neighboring state," Berman said. "There is certainly a heightened sense of urgency."
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