The Gasping of the Golden Goose

Ted Nesi tweets that state tax revenue data for March was down 26% from the expected $52.6 million, at $39 million, which Director of the Revenue Rosemarie Booth Gallogly calls “sobering.”  That’s actually not the whole story.

The numbers Ted cites are actually just income tax.  Looking at the monthly estimate to actual report from the office of Revenue Analysis shows that the $13,556,296 shortfall in income tax is only part of the $23,761,918 shortfall in all taxes, the $25,002,703 shortfall in total taxes and departmental receipts, and the total general revenue shortfall of $27,586,944.  Almost every major tax was down, except the sales tax, by a little.

That’s more than the controversial annual cost of the HealthSource RI health benefits exchange.  It’s more than twice the controversial 38 Studios bond payments.  And it’s on top of projected deficits, expected loss of gambling revenue, and the budget-busting decision to lure more Rhode Islanders into Medicaid.

It’s important to note that the previous table, which shows year-to-date revenue isn’t quite as discouraging, yet.  Total general revenue is only down $1.877,918 (-0.1%) for the year.  Still, all of the data points accord with the shrinking workforce and an anecdotal sense that Rhode Islanders are just demoralized and giving up, as personified by a governor who seems most focused on starting his retirement speaking tour early.

I’d suggest that these holes can’t be patched, and that trying to do so will only accelerate the decline.  The state needs a radical readjustment of its priorities, emphasizing the free economic activity of its residents.  Rhode Islanders need a bold shot in the arm to give them a sense that things can turn around

More tightening of the leash and moving of the needle in the wrong direction can only hurt.

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