Rhode Island’s budget basics

According to the National Association of State Budget Officers (NASBO), Rhode Island’s total expenditures in fiscal year (FY) 2021 were $15.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Rhode Island’s combined state and local direct general expenditures were $11.7 billion in FY 2019 (the most recent year census data were available), or $11,081 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.

Rhode Island’s largest spending areas per capita were public welfare ($3,104) and elementary and secondary education ($2,504). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Rhode Island’s combined state and local general revenues were $12.2 billion in FY 2019, or $11,511 per capita. National per capita general revenues were $10,563. Rhode Island uses all major state and local taxes. After federal transfers, Rhode Island’s largest sources of per capita revenue were property taxes ($2,529) and charges ($1,496), such as state university tuition and highway tolls.

Rhode Island’s politics

Governor Daniel McKee, a Democrat, assumed the office in March 2021, following the departure of former Governor Gina Raimondo, who left office after being confirmed as commerce secretary. Former Governor Gina Raimondo was elected in 2018 with 53 percent of the vote. The next gubernatorial election is in 2022.

Democrats control both the House of Representatives (65 Democrats to 10 Republicans) and Senate (33 Democrats to 5 Republicans), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Rhode Island. The entire legislature is up for election in 2022 because both representatives and senators serve two-year terms.

Rhode Island’s budget institutions, rules, and constraints

Rhode Island uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Rhode Island further limits spending with a budget rule that diverts a percentage of revenue to the state’s rainy day fund, but the limit may be overridden by a simple legislative majority. Rhode Island also limits total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Rhode Island’s current budget

Governor McKee released his budget proposal and gave his state of the state address in January 2022.

Rhode Island enacted its FY 2022 budget in July 2021. The enacted budget included $4.6 billion in general fund spending and $13.1 billion in total spending.

Under the American Rescue Plan, Rhode Island will receive $1.1 billion in direct state fiscal aid and $479 million in local government aid from the federal government. As of January 2022, Rhode Island had spent part of its ARP funds on economic development and broadband expansion.

According to NASBO, Rhode Island’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2021: $4.0 billion/$15.1 billion

• FY 2020: $3.9 billion/$11.4 billion

• FY 2019: $3.9 billion/$9.7 billion

For more on Rhode Island’s budget, see

• the Rhode Island Office of Management and Budget,
• the Rhode Island Office of Accounts and Control,
• the Rhode Island Transparency Portal, and
• Rhode Island House Fiscal Reports.

Rhode Island’s economic trends

Rhode Island’s per capita income (per the Bureau of Economic Analysis) was $61,942 in 2021, ranking 19th among the states. It was below both the national average of $63,444 and the New England regional average of $76,651. The state’s median household income (five-year estimate) was $70,305 in 2020, ranking 15th among the states and above the national average of $64,994. Rhode Island’s poverty rate was 11.6 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.

Although Rhode Island’s averages tell a story about the entire state, Rhode Island is composed of diverse localities. For example, the city of Woonsocket’s median household income was $44,310, and its poverty rate was 21 percent; the city of Cranston’s median household income was $74,425, and its poverty rate was 7.4 percent.

Rhode Island’s unemployment rate historically tracks the national rate. The state’s rate was above the national average in the years surrounding the Great Recession, but it has again paralleled the US rate for the past few years. (See how COVID-19 is affecting state employment and earnings data.)

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Rhode Island, the average unemployment rate in 2021 was 5 percent for white residents, 9.4 percent for Black residents, and 10.1 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)

The major industries that contributed the most to Rhode Island’s gross domestic product (GDP) in 2020 were finance, government, social services (i.e. health and education), professional services, and manufacturing. Government and social services contributed more to Rhode Island’s GDP than they did to the nation’s and region’s GDP, while manufacturing was less important to Rhode Island than it was to the nation and region in 2020.

Looking at more specific industries, among those that accounted for at least one percent of Rhode Island’s GDP in 2019, insurance carriers produced far more for the state than for the nation, contributing 5.2 percent to Rhode Island’s GDP and 2.9 percent to the nation’s. Other industries that overperformed in Rhode Island relative to national averages in 2019 were education, hospitals, management of companies, and nursing and residential care facilities.

Rhode Island’s demographics

As of July 2020, Rhode Island’s population was 1,057,125. That was up 0.4 percent from 2010. The state’s population growth rate was slower than than the nation’s 6.5 percent growth over the same period. The Urban Institute estimates the state’s population will decrease 0.7 percent between 2010 and 2030, compared to the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.