June 23, 2011

Rhode Island Budgeting: Increases Mean Cuts

Justin Katz

Ted Nesi's post, "What the heck is going on inside the new House budget?" prodded me to take a little bit of a closer look at the state's latest budget proposal, particularly when I read the following:

The House doesn't cut social services much more than Chafee. The Finance Committee budget would cut human-service programs like Medicaid by $78 million from this year's level; Chafee wanted to cut them by $71 million. So the House only made $7 million more in cuts than Chafee did in that area.

I just don't believe that the state government would do any such thing, so I asked Ted for his source, which he kindly forwarded: it's a hasty sheet that House Finance Chairman Helio Melo provided explaining his deficit solution as compared with the governor's. The $78 million, that is, doesn't appear to represent a cut from last year, but a reduction according to the department's initially requested budget for FY12. As Melo notes:

Deficit is difference between current law revenues and expected expenditures with no changes.

An excellent example of what this means is available with the first specific claim supporting that $78.1 million reduction: namely, that $19.1 million of it comes from the Department of Human Services. According to the supplemental midyear budget act (PDF), the state government appropriated for that department $2.285 billion in FY11, which it reduced to $2.223 midyear. Governor Chafee's FY12 budget act (PDF) brought the number back up to $2.240 billion, and the House Finance Committee (PDF) pushed it all the way to $2.368 billion — more, even, than last year's initial appropriation.

In other words, the House Finance Committee had to cut $19.1 million from the Dept. of Human Services in order to increase its budget by $83 million. Put more plainly, the department simply didn't get its full budget request, but will get 81% of the increase that it wanted, which amounts to 6.5% more than it received last year.

That method doesn't apply across the board, for every department (if I had the time I'd go through line by line), but as I noted to Ted, it is well worked into government processes to make budgets as confusing as possible so that nobody knows what's going on. There are multiple funds, multiple revenue sources, various forms of aid coming and going, everything's broken up differently in every list; one doesn't know if increases are compared to last year, the governor's proposal, or some requested budget proposed by department heads; and so on. Moreover, there isn't much transparency into the justifications for various estimates of revenue and requirements.

The following bullet list provides the bottom line for statewide totals:

  • FY11 Enacted:
    • General state revenue: $2,942 million
    • Federal funds: $2,903 million
    • Restricted receipts: $180 million
    • Other funds: $1,838 million
  • FY11 Revised:
    • General revenue: $2,965
    • Federal funds: $3,011 million
    • Restricted receipts: $179 million
    • Other funds: $1,956 million
  • FY12 Governor's Budget:
    • General revenue: $3,170 million
    • Federal funds: $2,557 million
    • Restricted receipts: $209 million
    • Other funds: $1,725 million
  • FY12 House Finance Budget:
    • General revenue: $3,145 million
    • Federal funds: $2,606 million
    • Restricted receipts: $189 million
    • Other funds: $1,763 million

When it comes to the amount that Rhode Islander's pay for their government (excluding the amount that we pay through the federal government), the House Labor Committee changed Governor Chafee's $4 million increase to a $3 million decrease. Removing the ambiguously named "other funds," it's increases from both: $235 million proposed by the governor, and $190 million by the legislators.

This is how our elected officials ought to look at their budgets, rather than the current scheme of requesting as much as politically feasible and calling smaller increases "cuts."

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