The Story of the Budget

Governor Chafee’s proposed budget for fiscal year 2015 offers a good lesson in shifting government priorities.  All told, his proposed fiscal year 2015 budget represents a $331 million (4%) increase over the enacted FY14 budget.  That’s made up of $96 million in general funds, $161 million in federal funds, $4 million in restricted receipts, and $70 million from “other” funds (mainly from the state’s gambling operation).

Where this gets interesting is the breakdown by department.  Look what happened to the federal funds:

After a parting mid-year boost to general government and public safety, the federal government is shifting its focus to health and human services, in large part at the expense of other categories.  (Transportation, I’m pretty sure, correlates directly with the state’s level of spending.)

The shift is happening within health and human services, as well.  Overall, the department is seeing a $210 million increase in federal funds.  But it’s seeing a $307 million increase for the Medicaid expansion (mainly giving able-bodied childless adults free healthcare if they don’t have a lot of income) and $316 million for a new program serving poor and elderly disabled people.  It would appear that the $413 million difference must be coming from reductions elsewhere.

One wonders whether the state officials who didn’t hesitate to sign Rhode Island up for expanding its social services handouts knew that the money would, de facto, be coming out of other areas of spending.

Now look at the total budget from all funds:

Except for natural resources, spending is up in every category.  That means the state government must be filling in the gaps that the federal government left… and then some. This happens from year to year, as well as from department to department.  When the recent federal stimulus wave dried up, the state budget didn’t really go down; local money just flowed in to fill the gaps.

Programs that were previously supported by the federal government — often approved by legislators and the people of Rhode Island because they didn’t feel like they were actually paying for them, are seamlessly making the transition to funding taken from locals through taxes, fees, and other unproductive drains on the economy, like gambling. If federal funds do return, it’s a safe bet that they’ll go toward the creation of something new.

One great example is the new Office of Management and Budget, whose creation amounted to a permanent continuation of the office that the state set up to manage stimulus funds… even after there were no stimulus funds to manage.

That raises the key point that really must be driven home to Rhode Islanders:  If the feds are allowed to reduce the funding they send the state and change their priorities for the money that they do send, thus making the state government adjust, the people of Rhode Island are allowed to do the same thing. Rather than increasing the budget by $331 million to expand government programs, Rhode Islanders should demand that the state government invest $313 million to eliminate the sales tax or (in the interest of open-mindedness) any other similarly sized boon to the people and their economy.

When the state government has to find money to keep programs going, it does.  And the chain of authority is supposed to start with us and run up to the state and then to the federal governments, not the other way around.  “How are we going to pay for it” is a question for government officials to answer, not an excuse not to help taxpayers for a change.

Disclaimer: The views and opinions expressed in The Ocean State Current, including text, graphics, images, and information are solely those of the authors. They do not purport to reflect the views and opinions of The Current, the RI Center for Freedom & Prosperity, or its members or staff. The Current cannot be held responsible for information posted or provided by third-party sources. Readers are encouraged to fact check any information on this web site with other sources.

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