STATE HOUSE – The House Finance Committee voted 13-3 today to approve legislation to use a combination of new federal funding, the state’s rainy day fund and unspent funds throughout state agencies to address a budget gap of about $250 million in the current fiscal year caused largely by revenue losses linked to the COVID-19 pandemic.

The bill (2020-H 7170A), which will be brought before the House of Representatives Thursday, makes use of additional federal funding provided to the state to help it weather the pandemic, as well as taking $120 million from the state’s “rainy day” fund to help balance the budget for the fiscal year that ends June 30 to make up for revenue losses approaching $300 million. It also accounts for $1.4 billion in new unemployment claims, most of which is covered by federal funds.

“The COVID crisis devastated our economy and the lost revenues placed tremendous stress on the current year budget, forcing us to make many tough choices in order to balance our books by June 30.  Despite these difficult times, however, we reconfirmed our commitment to education, ensuring local schools have nearly $10 million more in resources than they were expecting. Once we receive further guidance on additional federal assistance to all states, we will work to enact a responsible budget for the next fiscal year with the appropriate investments in education aid, municipal assistance and programs to strengthen our economy,” said House Speaker Nicholas A. Mattiello (D-Dist. 15, Cranston).

The bill distributes $50 million of the state’s $1.25 billion in federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding to school districts, weighted toward those with high concentrations of low-income students. This funding is in addition to $41.7 million already earmarked by Congress for schools in the CARES Act funding, which the budget assumes will replace part of the state’s obligations to local school districts.

To address the budget shortfall, the bill shifts about $35 million in personnel costs to the federal CARES Act funding for state employees whose duties shifted to pandemic response. Similarly, state higher education institutions will receive $29.5 million of CARES Act funding, allowing the state to reduce its support by $15 million.

The bill reallocated unspent funds from some agencies, including $17.8 million from the Rhode Island Infrastructure Bank, $300,000 in unspent funds from Department of Environmental Management bond issues, $500,000 from forfeited assets collected by the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals, and $15 million from the Rebuild RI tax credit program.

Part of the state’s budget gap is attributable to a billing and compliance issues at the Eleanor Slater Hospital. From August until February, the hospital was not in compliance with federal Medicaid rules, and that other patients could not be billed through Medicaid or Medicare as expected, resulting in $50.1 million in revenue losses that had to be accounted for in the supplemental budget. Unresolved prior billing issues account for another $14.6 million. The state could face an additional $12.2 million in costs if the Executive Office of Health and Human Services does not meet a June 30 deadline to address the billing issue.

Overall, the supplemental budget increases the state budget from $9.97 billion to $11.79 billion, largely as a result of the expenditure of federal funding, most of which has already occurred.

The supplemental budget passed today addresses the current fiscal year. Typically, lawmakers address current-year budget gaps in the budget bill for the next fiscal year, but the state is awaiting federal action on additional relief for states. Lawmakers are expected to return to the State House this summer to address the budget for Fiscal Year 2021 after the federal funding level is known.