How Rhode Island Expenditures Compare - 2014 Edition

Rhode Island Public Expenditures Council

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How Rhode Island Expenditures Compare - 2014 Edition

PROVIDENCE, R.I. (February 2015) – RIPEC today released its annual report titled How Rhode Island Expenditures Compare, which provides details on state and local government expenditures in FY 2002 and FY 2012, the latest year for which national data is available. This year’s report also includes an analysis of the changes between FY 2011 and FY 2012. The publication compares Rhode Island’s spending with that of the other 49 states and the national average using data released by the US Census Bureau. To see the full report, click here.

Rhode Island’s total direct general expenditures (excludes expenditures for utilities, liquor stores, insurance trusts, and intergovernmental spending) as a share of personal income are slightly higher than the national average (per $1,000 of personal income: $195.08 in Rhode Island compared to $191.63 nationally). On a per capita basis, the Ocean State’s total spending of $8,844 was 6.5 percent greater than the national average of $8,304. Overall, Rhode Island’s total direct expenditures (which includes the items excluded above) was 12th highest nationally on a per capita basis and 20th highest as a share of personal income.

The report also finds a continuation of spending patterns found in past reports. Vendor payments – payments made directly to private vendors for medical care on behalf of means-tested beneficiaries (e.g., Medicaid Title XIX and Medicare Part D payments) – continue to account for the largest share of growth in state and local expenditures in Rhode Island. Over the past ten years, spending in this category accounted for 35.4 percent of the total change in direct general expenditures, compared to 22.5 percent nationally. Between FY 2002 and FY 2012, total expenditures for vendor payments increased by 77.8 percent in Rhode Island and by 98.3 percent nationally. Rhode Island’s expenditures for vendor payments now place the state sixth highest nationally on per capita and personal income bases.

Similarly, spending on elementary and secondary education continues to be a major driver of state government spending, both in Rhode Island and throughout the nation. Between FY 2002 and FY 2012, elementary and secondary spending accounted for 24.4 percent of the total growth in state and local spending in Rhode Island, and 18.0 percent of the total increase nationally. Rhode Island continues to rank in the top half of the country for K-12 spending, both as a share of personal income (13th highest) and per capita (8th highest). In contrast, the state spends significantly less on higher education than the rest of the country, ranking 44th as a share of personal income and 45th per capita.

Insurance trust expenditures, which are considered outside of direct general expenditures, and include unemployment compensation, workers’ compensation and employee retirement costs, also increased substantially over the past decade. The primary drivers of this increase were unemployment compensation and employee retirement costs. Between FY 2002 and FY 2012, unemployment compensation costs increased by 143.3 percent and employee retirement costs rose by 99.0 percent. However, unemployment compensation expenditures did decline by 14.1 percent between FY 2011 and FY 2012.

Transportation expenditures represent one area where Rhode Island spends significantly below the national average. In FY 2012, the state spent $9.23 per $1,000 of personal income (45th highest nationally) and $418 per capita (42nd highest) on highways. The state’s expenditures for other transportation expenditures – a category which includes air transport, parking, and sea and inland port facilities – also place Rhode Island below the national average (per $1,000 of personal income: $1.20 in Rhode Island compared to $2.13 nationally). Overall, combined transportation spending lags the national averages on a personal income and per capita basis ($10.43 v. $13.87; and $473 v. $601, respectively).