The Impression of a Surplus

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This article from a few weeks ago shouldn’t pass into memory without comment:

Rhode Island finished the past fiscal year with a $29-million surplus, $25.5 million of which the state is already counting on in its budget for the current year, according to a preliminary accounting of the year that ended June 30.

State spending for the year that ended June 30 came in $12 million lower than the final, revised spending plan lawmakers approved earlier that month; state revenues were $2.1 million higher than expected.

Review the budget documents from the House Fiscal office for the real story.  With less than two weeks remaining in the fiscal year, the state increased its final budget for that year by $174 million.  This new “surplus” is just the extra wiggle room they gave themselves, and the fact that they are counting on almost all of it for the next year raises the question of how aware they were of the likelihood.

Of course, one could reasonably argue that the state ought to budget with the expectation of a small surplus.  In that case, however, the story isn’t really about a surplus, but about the absence of an unforeseen deficit.

To say that the government ended the year with a surplus is like saying your child has money left over when he or she gives you back a quarter from a hundred dollar bill that you gave him or her to buy something for $98.  That $1.75 went to buy some unapproved candy, but your kid wants credit for giving you any change at all.



  • Makaha Ken

    The state of Hawaii is made up of 132 non-connected  islands with total landmass approximately 10 times larger than state of Rhode Island. Hawaii executive branch budgets on a biennial basis using the Planning, Programming and Budgeting System (PPBS) adopted in 1970. The biennial budget is submitted to the Legislature in odd numbered years and the supplemental budget is submitted in even numbered years. Under the PPBS, operating and capital improvement requirements are evaluated together over a time frame of six years. 

    Hawaii state constitution requires a balanced break-even state fiscal budget based only on collected resident taxes and fees. If there are excess funds at end of biennial fiscal budget year, they must be returned to the taxpayers (I’ve received one rebate check in 12 years.). Hawaii law does not allow carrying over excess funds into next fiscal budget year.

    The Hawaii approved biennial fiscal budget proposal for year 2020, 2021 is $16 billion based solely on 1.4 million resident collected taxes and fees. To put that in perspective, 10 million tourists and visitors come to Hawaii each year spending $17.9 billion extra into the economy.  Gambling is illegal in Hawaii and it’s waters. Hawaii residents receive a lot of local government services at reduced pricing or tottally free that are charged full price in lower 48 contiguous states.

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