January 29, 2023 District Letter

Last week, Hugh Clements concluded his distinguished service as Chief of the Providence Police Department to begin work as Director of the Justice Department’s Office of Community Oriented Policing Services. In a time when many urban police departments have been the source of crisis and tragedy, Chief Clements earned the respect and trust of both our City’s residents and the Department’s officers. He will be missed. In the meantime, the General Assembly has begun to review the Governor’s budget, and I will describe in this week’s letter the Governor’s proposed changes to the $1.13 billion American Rescue Plan Act State Fiscal Relief Fund (“SFRF”) budget we passed last year.

A. The Three Components Of The Governor’s Budget

As was true with last year’s budget, the Governor’s budget can be viewed to contain three major components, namely the (approximately $10 billion) “traditional” budget which is funded with a mix of state and federal funds, the $1.13 billion SFRF budget funded by Congress in 2021 and a $610 million surplus budget of revenue the State received last year in excess of expenditures. You can review the Governor’s budget, the Senate Fiscal Office’s initial analysis and other related documents by clicking here. Federal guidelines define the acceptable uses and timeline for Rhode Island’s expenditure of the $1.13 SFRF budget. Last year, the General Assembly approved an SFRF spending plan in this amount. 

B. The Governor’s Proposed Revisions To The SFRF Budget

This year, the Governor proposes changes to approximately $170 million of last year’s SFRF budget, including the following major items: 

1.      Reductions

2. Additions

3.Released and Uncommitted Funds: $40 Million

C. Standards To Evaluate These Proposed Changes

As the Senate Finance Committee conducts hearings in the coming months to review these changes in more detail, I can share with you the standards I will apply in evaluating this portion of the budget. The revised budget must comply with the federal guidelines I described in a November 14, 2022 letter. More generally, I will be asking whether the revised budget meets the the broader goals of the ARPA program, as described, for example, by the Rhode Island Foundation’s Make It Happen report as a ”general commitment to transformational change that will benefit those communities and underserved populations that have been disproportionately impacted by COVID-19.” 

Here are some questions I will be asking as we learn more about the Governor’s budget:

1.     The Reductions ($165 million plus other smaller items not described here)

The General Assembly approved last year’s $70 million Blue Economy commitment on the condition that the State could secure a competitive federal grant, which unfortunately did not occur. As a result, those funds need to be redirected without question. I will have questions, however, about the proposed $95 million reduction in public health response funds. Rhode Island currently is the state with the fourth highest COVID case count of 22 per 100,000 residents, a figure that probably understates our position due to the lack of surveillance testing. I want to ensure we are not taking any shortcuts with our State’s pandemic response and public health program before we divert these critical funds into other “nice to have” programs.

2.     The Additions ($130 million in major items plus others not described here)

In addition to the basic questions concerning the federal SFRF guidelines and the specific financial merits of each proposal, I will view each of the proposed revisions through the broader goals of transformational change and benefits to communities disproportionately impacted by the pandemic. Viewed through this framework, I will need to be convinced that such projects as funding municipal roads and a public safety complex in Woonsocket, as worthy as they may be, are appropriate expenditures from the SFRF budget. (They may well merit funding from other sources, such as the surplus budget or, as I will be presenting in a municipal infrastructure bill in the coming weeks, a portion of the gasoline tax.)

3.     Released and Uncommitted Funds ($40 million)

I expect the General Assembly to propose uses for these funds through the upcoming budget process.

D. Conclusion

At least part of the SFRF budget must be revised in light of the unavailability of federal funds to supplement the proposed $70 million “Blue Economy” initiative. In evaluating the proposed ways to repurpose these funds, I will be looking at the merits of each proposal, compliance with federal guidelines, and how well the proposals meet the original transformational goals of the ARPA program.