FOR IMMEDIATE RELEASE: May 29, 2020
A 2021 Budget Strategy For Long-Term Prosperity
Legislative Leaders Not Understanding the New Reality?
Providence, RI – With about one-billion dollars in anticipated revenue shortfalls, and with recent statements from leading Rhode Island lawmakers indicating a general feeling of helplessness, the RI Center for Freedom & Prosperity today published a new report with proven budget strategies that can help put the state on a long-term trajectory towards prosperity.
Virtually all recent comments from public officials indicate an undue reliance on federal bailout funds in the hope that status quo spending levels might be maintained. This is not a budget strategy.
Compiled after numerous discussions with colleagues in other states, as well as with state budget experts with national organizations, the Center’s report, Decision of the Century, is premised on the understanding that the decisions soon to be made by lawmakers in dealing with the pandemic-caused revenue losses, will set the near and long term trajectory for the Rhode Island economy; whether our state will experience a “V”, “U”, or “L” shaped recovery and what our Ocean State’s business climate will look like in the years and decades ahead.
“The budget problems we face did not come down from the heavens; they were government-made and they can be reversed. Lawmakers should not feel helpless, nor should they rely on the federal government. Many states are taking proactive steps to prepare their state economies for rapid recovery … and we must do the same,” advised Mike Stenhouse, the Center’s CEO. “Lawmakers have to understand that they can no longer hide from the responsibilities and difficult decisions they were elected take on. The status quo budget approach – tax, spend, and borrow – will not work in response to this pandemic crisis.”
Similar to what the state of Washington adopted years ago, the report, co-authored by professor Dennis Sheehan and research director Justin Katz, highlights proven budget strategies that are flexible enough to navigate the unpredictable and massive deficits that lay ahead, while allowing the freedom for economic growth. The three key components of this strategy are:
- Establishing “Core Principles of Government” – to ensure that the most-vital functions of government are clearly defined as guidelines for the budget process
- Adopting a “Revenue-Constrained Spending” philosophy – committing the state to spending only those moneys that are actually taken in, at current tax and fee rates
- Setting “Priority Based Spending” targets – such that specific spending categories or programs are pre-prioritized and will be funded only as actual revenue receipts are realized
The primary decision for lawmakers will be to determine what budget strategy path Rhode Island’s financial recovery will take. Will it go down the road of a centrally “planned economy”, with lawmakers arbitrarily making political tax and spending decisions that impose more government control over our lives? Or, will the “invisible hand” of the free-enterprise system be allowed to work, increasing prosperity and paving the way for more rapid economic, jobs, and income growth?
This critical decision will determine whether the Ocean State is to become a more or less hospitable place to raise a family and build a career; and whether families, graduates, retirees, and investors will continue to flee our state.
“In these unique times, a reality-based budget strategy is required. There is no time to pretend that the same old budget approach … one that has created the worst state business climate in the nation … can work for us now,” concluded Stenhouse.
More information and budget posts from the past years can be viewed at RIFreedom.org/Budget.