How Rhode Island Expenditures Compare - 2016 Edition

Rhode Island Public Expenditures Council

Publications

How Rhode Island Expenditures Compare - 2016 Edition

PROVIDENCE, R.I. (February 2017) – RIPEC today released its annual report titled How Rhode Island Expenditures Compare: 2016 Edition, which provides details on state and local government expenditures in fiscal year (FY) 2014, the most recent year for which national data are available. The publication compares Rhode Island’s spending with that of the other 49 states and the national average using data released by the United States Census Bureau. Two measures are used to make comparisons between states in RIPEC’s report – per $1,000 of personal income and per capita. The report also provides a five- and ten-year historical perspective, by comparing expenditures in FY 2014 to those in FY 2009 and FY 2004.  To see the full report, click here.

Rhode Island’s total direct general expenditures grew over the FY 2004 – FY 2014 time period (by 27.2 percent), but at a slower rate than the U.S. overall (42.2 percent).  Nevertheless, Rhode Island remained in the top half of the country for highest-spending states in FY 2014, with expenditures that exceed the national average when measured on both a personal income (22nd highest) and per capita (15th highest) basis.  Among its peers in New England, Rhode Island ranked third highest on a personal income basis (after Vermont and Maine) and fourth highest per capita (after Vermont, Massachusetts and Connecticut).

Notably, the fastest growing subcategory of total direct general expenditures in Rhode Island was government administration & interest on general debt, which increased by 48.7 percent over the 10-year period, significantly outpacing the national growth rate of 29.8 percent.  This increase was largely driven by growth in interest payments, which grew by 84.1 percent between FY 2004 and FY 2014 (spending on government administration only increased by 22.0 percent over the same time period).  Rising interest payments in Rhode Island have had a significant impact on the state’s national rankings in this category – in FY 2004, the state’s spending on interest ranked 20th highest on a personal income basis and 15th highest per capita; by FY 2014, Rhode Island was ranked first highest on a personal income basis, and third highest per capita.

Total social services and income maintenance expenditures remained a major driver of state and local government spending, accounting for nearly 30.0 percent of FY 2014 total direct general expenditures in both Rhode Island and the nation as a whole.  Total expenditures in this category continued to grow between FY 2004 and FY 2014 in Rhode Island and the country as a whole, but the rate of growth was substantially slower in the Ocean State relative to the national average (22.2 percent compared to 59.8 percent).  Historically, Rhode Island’s social services expenditures were well above the national average on both a personal income and per capita basis.  However, the relatively slower rate of expenditure growth in Rhode Island has brought the state’s spending closer to the national average in this category.  By FY 2014, the state spent 0.1 percent less than the national average on a personal income basis (compared with 17.0 percent greater spending in FY 2004), and 2.8 percent more than the national average on a per capita basis (compared with 21.2 percent in FY 2004).  Relatively slower growth likewise had an impact on Rhode Island’s national rankings in this category – between FY 2004 and FY 2014, the state went from 13th to 27th highest on a personal income basis, and from 7th to 19th highest per capita.

Total education and library expenditures also remained a major driver of state and local government spending, accounting for approximately one third of total FY 2014 direct general expenditures in both Rhode Island and the country as a whole.  Rhode Island’s K-12 expenditures remained among the highest in the country, ranking in the top ten states on a personal income and per capita basis in FY 2014.  By contrast, the state’s higher education expenditures ranked among the ten lowest spending states on both a personal income and per capita basis.

Rhode Island’s FY 2014 total public safety expenditures remained in the top ten nationally, with fire protection expenditures once again ranked first highest in the country on both a personal income and per capita basis.  The Ocean State’s FY 2014 police protection expenditures also remained above the national average, while corrections expenditures remained below average, on both a personal income and per capita basis.

Rhode Island’s total environment and housing expenditures remained below the national average on both a personal income and per capita basis in FY 2014, but the state has moved closer to the middle of the pack since FY 2004.  When measured on both a personal income and per capita basis, the Ocean State’s FY 2014 expenditures on natural resources, parks and recreation remained among the ten lowest nationally, while expenditures on housing and community development remained among the ten highest.

Rhode Island’s transportation expenditures  remained among the lowest in the country and well-below the national average, placing the state in the bottom ten nationally in FY 2014 on both a personal income and per capita basis. However, it is important to note that these data measure expenditures prior to the adoption of RhodeWorks in January 2016.  RhodeWorks is Rhode Island’s ten-year plan for rebuilding the state’s roads and bridges, and it includes a substantial increase in transportation funding through borrowing and the eventual tolling of bridges.