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RHODE ISLAND

Rhode Island

State Recovery Act Website: http://www.recovery.ri.gov/

Rhode Island's state Recovery Act website scored 42 out of 100 possible points (ranking 25th) on Good Jobs First's second 51-state study of state stimulus websites entitled Show Us the Stimulus (Again). The state scored well in categories relating to the display of ARRA spending by category and the presentation of data, including job numbers, relating to specific grants and contracts. Unlike numerous other states, Rhode Island does not map the location of ARRA projects. For detailed scoring information, see the Rhode Island appendix of Show Us the Stimulus (Again).

Coordination & Oversight

Gov. Carcieri chose Beverly Najarian, his deputy chief of staff, to lead the Office of Economic Recovery and Reinvestment. Najarian, who worked earlier as an executive for Old Stone Bank, was chosen by the governor as the state's Director of Administration in 2003.

Gov. Carcieri rejected a proposal to give oversight of the state's stimulus money to a panel of lawmakers and gubernatorial appointees. Instead, the governor created a four-person Office of Economic Recovery and Reinvestment led by Najarian. Carcieri's decision to exclude the legislature prompted both the House and the Senate to draft legislation creating separate committees to manage the funds. Two House bills (H5717 and H5553) were introduced in the 2009 legislative session to create committees on federal stimulus oversight and spending, but neither bill passed.

 

Policy Debates

Rhode Island has been hit particularly hard by the economic downturn.  The state's unemployment rate has been among the highest in the country and our budget deficit among the largest proportionally.

During the 2009 legislative session, policymakers were faced with a more than $460 million budget gap for fiscal year 2010, which later grew to $586 million as estimates were revised.  This represents close to 20% of Rhode Island's general revenue spending for the current fiscal year.

Policymakers enacted a budget that totals $7.8 billion, a 12.9% increase when compared to the FY2009 Original Enacted Budget.  This is due in large part to the increased federal funds made available through ARRA.  Rhode Island General Laws requires the General Assembly to appropriate federal funds received by the State of Rhode Island. This includes funds received under the American Recovery and Reinvestment Act of 2009 ("ARRA").

Two major components of the ARRA are the State Fiscal Stabilization Fund and the increased Federal Medicaid Assistance Percentage (FMAP) both of which have a direct impact on the State General Fund or operating budget. The federal stimulus funds provided relief of $178.3 million in FY2009 and are expected to contribute $231.2 million in FY 2010 and $139.2 million in FY 2011.

Originally the Governor had included $252.1 million of ARRA funds in his Revised FY 2009 budget and $529.1 million in his FY 2010 proposed budget through formula-driven grants.

While the Governor's FY 2010 Budget proposed to use ARRA funds to plug some budget holes, the budget also included some significant tax cuts for businesses and wealthy individuals.  In effect the federal stimulus funds were to "paper over" the hole created by his proposed tax cuts.  There is little question that  these proposals were contrary to the goal of ARRA, which is to minimize the need for cuts in the state spending on vital services in order to maximize economic growth during the immediate crisis.

The House of Representatives Finance Committee recommended several changes to the Governor's proposed use of ARRA funds. This includes the total change in federal funds related to changes in the medical and cash assistance caseload estimates plus additional unemployment compensation.

The House also rejected the Governor's tax cuts, as well as several expenditure cuts to programs for low- and modest-income Rhode Islanders.

STIMULUS NEWS:

The state's House Finance Committee held a hearing on January 14, 2010 on federal spending of the ARRA funds, where it was reported that of the $1.26 billion the state has received, it has spent less than half ($551 million).   This includes $138 million in transportation funding -of which only $44 million has been spent.  There is much concern that the state agencies are not doing enough to spend the funds they have received.  There is also concern that agencies are not applying for available stimulus-related competitive grants that could help the state. For more see here.

In other news:

  • Energy Funds: Rhode Island has received $58 million in ARRA funds for energy projects but due to department head departures the money has largely gone undistributed. A newly appointed Office of Energy Resources director seems committed to get those funds distributed quickly. See here and here.
  • Job creation: ARRA funds are estimated to have helped save or create 2,012 jobs in the state as of the end of Oct 2009.
  • Homeless prevention: ARRA funds will be used to help 13,000 avoid Rhode Islanders homelessness.
  • Broadband: The Office of Economic Recovery and Reinvestment reports that the state has received an ARRA funded grant to expand broadband access in the state.
  • Unemployment Insurance Modernization: Due to the state's high unemployment, the state's unemployment trust fund is now depleted. The Governor's Employment Security Advisory Council is recommending that the state make two changes to the program in order to receive ARRA "UI Modernization" funds, which will amount to $7.8million for the state.
Last updated on: 22 February, 2010

Quick Facts

Population:
1,050,788

Median Household Income:
$53,568

Unemployment Rate:
12.8%

Poverty Rate:
12.0%

Estimated Recovery Act Funding:
$1.1 billion

Resources

The Poverty Institute has published materials on the Recovery Act and its impact on Rhode Island's low- and moderate-income families. These include:

American Resource & Recovery Act: An Overview, March 19, 2009; online here .

American Resource & Recovery Act: Support for Low-income Families, March 19, 2009; online here.

American Resource & Recovery Act: A Resource Guide; online here.

Rhode Island Impact and Opportunities under the American Recovery and Reinvestment Act, prepared by the House and Senate fiscal offices and budget office; online here.

American Recovery and Reinvestment Act Staff Presentation to House Finance Committee; online here.

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