11/12/09

$200 Million and Counting

Budget forecasters are now predicting a $200 million budget deficit for this fiscal year... and that's a conservative estimate! (The new figure is $219 million.) The General Assembly, in its cowardly practice of sticking the tough decisions with the Governor, passed a joint resolution during its whirlwind rump session last week calling on him to submit a "corrective action" plan by this coming Monday. Of course, that's not going to happen. What's needed, and as fast as possible, is a supplemental budget to deal with the growing deficit, which is being driven by the steep drop in state revenue.

Governor Carcieri has indicated he's not going to call for any tax raises. Instead he's probably going to further slash revenue sharing with the state's cities and towns. When the ship of state is sinking, throw overboard the passengers is his reasoning, I guess. It might ease the state deficit a bit by cutting more funding to cities and towns but it just makes their situation that much worse. A number of RI municipalities are at the breaking point already.

This is what happens when our politicians refuse to deal with the biggest problem facing us. This situation didn't come out of nowhere; it's been building up for several years now. All it took was an average recession for RI's finances to collapse, never mind an occurance like the Great Recession. Our recovery is a long way off.

In the meantime, things are going to get ugly. Reforming state government by downsizing and consolidating won't produce instant savings. Similarly, further squeezing state workers and pensioners will be met with significant legal challenges, meaning no savings will occur anytime soon. And because of the labor agreement that came out of the Council 94 settlement, the governor can't reduce the state workforce for the rest of his term. As the Governor recently stated, "There are no easy decisions. There's no low hanging fruit."

Again, the dread prospect of state insolvency, coupled with the collapse of some of our local town governments, cannot be ruled out in the future.

What do you think our politicians should do to close this $200 million gap?