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By JIM BARON
PROVIDENCE — With a first quarter report showing that the state budget will be nearly $220 million in the red by June 30 if revenues and spending continue down the paths they are on, the Carcieri administration is clamping down even further on each dollar the government spends.
The governor described it in a radio interview Tuesday as “a renewed urgency to tighten everything.”
A “hard freeze” on hiring has replaced an earlier injunction against filling open positions, Carcieri spokeswoman Amy Kenpe said Tuesday.
Going forward, Kempe said, the only positions that will be filled are those that are 100 percent federally funded, those mandated by statute or court order, those that impact on public safety and health and those directly tied to generating revenue for the state.
The projected deficit, the first quarter report states, is a result of an opening deficit of $61.8 million, a revenue shortfall of $130.4 million, overspending of $34.9 million, offset by $4.6 million in lowered reserve fund contributions
Tax revenues are expected to fall short of budgeted estimates by $139.8 million. Personal income tax receipts are down $44 million from budgeted estimates. Sales and use taxes are down $64 million. The increased cigarette tax was down $7.7 million from budget estimates, although the alcohol tax brought in $100,000 more than expected.
On the brighter side, departmental revenues, including the state lottery, are up by $9.4 million.
Savings from unpaid leave days agreed to by the bulk of unionized state employees are projected to save $12.5 million. But Kempe said those unpaid work days could have an additional benefit.
Part of the agreement with the unions, she noted, “was that in exchange for no layoffs for two years, there would be some flexibility of personnel, so if we needed to shift personnel from one agency to another or from one division to another, we would have that ability. That flexibility is going to be critical as we manage our way through the recession in the next couple of years.”
Among the options that flexibility could give managers, she said, is looking at opportunities for consolidating some services and perhaps eliminating others altogether. “These are all the things the administration and the budget office are currently looking at, working with the agency directors and cabinet directors and communicating with the House and Senate.
She said Administration Director Gary Sasse will be discussing the first quarter budget report with the House Finance Committee next Monday.
Kempe noted that in the past two and a half years, the crippled state and national economy has cost the state nearly a half-billion in anticipated revenues.
“So what we are looking at now,” she said, “is how the state delivers current-level services and whether there are services the state should no longer be delivering. There is no low-hanging fruit left, there are only hard decisions. For the past several years, the state has been managing through declining revenues, making cuts across the board, cuts to cities and towns, cuts to agency budgets, cuts to human services, there is very little left to cut. We have to look at how we deliver services and how we budget.”
One thing the administration and budget office are looking at, Kempe said, is looking ahead to budgets for the next two, three and four years when making decisions. “They are making decisions from the long-term forecast, not just the immediate forecast.
One of the topics being considered is leasing or selling the state landfill. A Request for Information (RFI) has been circulated, which Kempe said, “is an opportunity for investment bankers or investment companies or those types to come in and say, here is what it is worth, here is how you could structure (a lease or sale) if you moved forward, a request for proposals. We have an asset there and in this fiscal climate it is only prudent to explore the value of that asset and what it could mean for the state in the short term and the long term.
One thing the governor is not willing to look at, Kempe said, is increasing taxes, which she said Carcieri believes would be “a horrible mistake.”
Rhode Island has improved its rankings in many categories compared to other states because those states increased taxes as a response to budget deficits while Rhode Island has held the line in recent years.
“The governor does not believe that raising taxes is, at all, the right approach,” Kempe said.
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