House finance committee will dissect the federal recovery act in order to determine where the money can be spent.

By CARL CRITZ

NARRAGANSETT - Breaking down the newly-signed Economic Recovery Act will likely be the first order of business at the State House when the General Assembly resumes on Tuesday, according to  Representative David Caprio, (D-34, South Kingstown, Narragansett), and a member of the House finance committee.

 The year has already gotten off to a hectic start, according to Caprio who said during an interview Wednesday that even though the act has been passed, the state still isn’t out of its own economic quagmire.

“The federal recovery act is only a day old, so there is no real talk yet,” said Caprio.  “But the finance committee staff is gathering itself to figure out what we are eligible for to maximize our take.  It’s a 1,200 page bill that not one member of congress had time to read before signing.”  

Nevertheless, Caprio said he is excited to begin the process of sifting through the language of the stimulus act with the committee. “I am encouraged by the tremendous amount of effort put in by members of the House finance committee.  I look forward to imposing some agreeable changes.”  Caprio said the stimulus plan would not be fully realized for at least several weeks.

“I’m waiting to see what discretion the states have for the package.  The government doesn’t just write a check and we can do what we want with it.  The funds will have to be used for certain projects.   Its more what the president and congress want us to spend it on than what we
want to do with it,” he said.

The Governor has his opinion, and in this financial crisis we need to rethink the size and structure of our government so we can move forward.  We’ll see how much discretion we’ll have.”
The act comes at a crucial time when the efforts of lawmakers to usher forward necessary changes were stymied last week in Providence.  “Last week we took some of the Governor’s proposals out of the finance committee and onto the floor of the house, such as the cigarette tax increase.  Once it hit the floor the governor said he wouldn’t support it,” Caprio said.

When asked if it was an issue of communication, he explained the governor appeared to have had a change of heart.  “He wants the whole [proposal] out, not one issue at a time.  We haven’t passed anything into law yet.  The governor’s support is not there.”

“What they are realizing is that the state is further in debt than originally thought,” said Caprio, who said that if the supplemental budget were approved as is, it still wouldn’t cover the loss for the 2008-09 fiscal year.

“Every so often we get tax revenue numbers, and then we compare them to our projections.”  With tax revenues falling well short of their marks, Caprio said the budget will fall 50 to 60 million dollars short this fiscal year.   With a state deficit approaching $400 million for the current year, and next year that number could be equal or greater according to Caprio.

“We have to look at adjusting to make up for a bigger shortfall, and the task has grown more challenging recently,” said Caprio.  Currently the finance committee is actively conducting hearings from different departments and unions, asking them where they think they can make fair adjustments.
“Chairman Constantino has stated that everything is on the table.  He was also quick to state that raising state taxes is a last resort.”  Unlike the federal government, the state is prohibited from borrowing or selling bonds to close a budget gap, according to Caprio. The only tangible options are to raise revenue or make cuts.

The pain of finalizing this year’s budget will be short-lived, as legislators will be preparing to tackle the 2009-10 fiscal year budget in the coming months.  

“We will be facing all of the same issues next year,” said Caprio.  “In years past they have rolled the supplemental into the year’s budget.  Even from a cash management perspective we will be hard pressed to do that.”