5 Danger Areas for Raimondo’s Budget
GoLocalProv News Team
5 Danger Areas for Raimondo’s Budget
To set the stage, this fiscal year has a $60 million shortfall that needs to be closed in the next five months.
Next fiscal year, the budget shortfall is anticipated to exceed $200 million.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“This is a difficult budget environment,” said Michael DiBiase, the director of the Department of Administration who managed Raimondo’s proposal forwarded at Thursday’s budget briefing. “We have a lot of uncertainty in Washington.”
Certainly, Washington seems to be in a consistent state of flux. Despite GOP control of both chambers of Congress and the presidency, every day seems to offer a new fiscal policy.
However, no one seems sure if Rhode Island will realize a windfall via the implementation of the newly adopted federal tax reform package or if the state will be adversely impacted.
In an interview with GoLocalProv, John Buhl manager of media relations at the Tax Foundation, said there are numerous factors that could impact Rhode Island. Other states will realize a boon to their budgets.
The Raimondo Administration’s FY19 budget expects to resolve the anticipated deficit with adjustments to Medicaid budgets, increased taxes on cigarettes and tobacco and a possible revenue boost of $23.5 million from sports betting, which is dependent on the Supreme Court striking down a federal law that prohibits states from running sports betting games. A ruling in Christie v. NCAA is not expected until May.
Here are five issues the makes this budget process very complex.
5 Danger Areas for Raimondo’s Budget - January, 2018
Danger #1 -- Budgeting Based on a Supreme Court Decision
Supreme Courts often make decisions that are unexpected. Few expected the Supreme Court to make gay marriage legal in all states a few years ago. Many predicted Supreme Court cases' outcomes have not come to fruition.
Equally important is most states are looking forward to this decision with anticipation — thus, out-of-state players are not likely.
Raimondo is betting big on Trump's Supreme Court.
Danger #2 -- Medicaid Changes
Raimondo’s plan would charge Medicaid enrollees new co-payments between $2 and $8 on services that tend to be overused, said Patrick Tigue, Medicaid Program Director for the Office of Health and Human Services. Non-disabled adult enrollees would pay a co-pay of $8 on non-emergency emergency room visits, $3 for non-preventative physician visits, $4 for name brand prescription drugs, $2.50 for generics, and $3 for inpatient hospitalizations.
While the disabled and elderly make up for only 20 percent of Medicaid enrollees, they account for 59 percent of the state’s expenditures, according to a study by the Kaiser Family Foundation. Still, Eric Beane director of the Office of Health and Human Services said the new fees would add up to $3.2 million in new revenue.
The changes would bring Rhode Island in line with 24 other states, including Massachusetts, that instate these types of co-payments, Beane added.
“Ideally everyone would regularly visit with a primary care physician,” he said. “In the long run, we’ll have a lot more money and be able to take care of more priorities for Rhode Islanders if we aren’t unnecessarily spending on emergency departments as opposed to investing earlier when it leads to better outcomes and less costs.”
He also proposed to reduce costs with new software that would more quickly and accurately determine eligibility in the Medicaid program.
Danger #3 -- New Spending — There is a Lot
Raimondo’s new budget has a lot of new spending initiatives. There is everything from a new $200K for a new pilot program which allows eligible low-income parents to receive child care assistance which they are enrolled in a state college to the $250 million for schools. The collective number of new spending initiatives couple with just recently enacted programs (RI Promise — free tuition for CCRI), a deficit, and uncertainty in Washington may just be too much for legislators.
Certainly, the House Finance may rebuff this eclectic and costly budgeting proposed by the Raimondo administration and decide to go simple in an election year.
Danger #4 -- Jobs
Despite all of the investments in corporate subsidies by the Raimondo administration, job growth trends are murky at best.
RI has recruited Johnson & Johnson, GE, Virgin Pulse and Infosys as well as a number of other out-of-state companies. But, in the past few months, Department of Labor and Training monthly job reports have shown little growth. December numbers released on Thursday saw Rhode Island losing jobs.
Danger #5 -- Relationships
It is no secret that the relationship between Governor Gina Raimondo and Speaker Nick Mattiello is a difficult one. The State of the State clearly pointed that Raimondo is going to run on her record, but the key to that strategy is job and wage growth.
She needs better job numbers now. If she doesn't get them, her re-election strategy is likely to pivot to running against the General Assembly. We know how Speakers love that.
