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Rhode Island‘s New Balanced Budget

by Kristine Tuinstra / /

Early this morning, the Rhode Island House passed a new $7.8 billion budget.  The House eliminated the $182 million deficit in the current year and balanced the budget for the upcoming year, eliminating what could have been a $366 million deficit.  Lawmakers are quick to tout that they balanced the budget without raising any new broad-based taxes.  They accomplished this by cutting about $120 million in local aid to cities and town.  This will, then, lead to higher local taxes or cuts in services.  (The House passed a measure allowing communities to raise the car tax.)  They also made changes to the state's pension system and eliminated annual adjustments for inflation for future retirees in order to reduce unfunded pension obligations. 

In order to balance the budget, lawmakers are relying on $100 million in federal Medicaid funding (which Congress wants to cut.)  If the federal funds don't materialize, the House allows the governor to make across-the-board cuts in the budget.  If the budget passes the Senate this afternoon, it will reach Governor Carcieri's desk over the weekend. 

Just as citizens in Rhode Island have to make difficult decisions regarding how to allocate their own resources, so too must the Rhode Island legislature.  Lawmakers are finally following the lead of responsible citizens and focusing on cutting spending rather than simply raising taxes yet again.