New RIPEC Report: RI Is a High Tax, High-Spending State
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New RIPEC Report: RI Is a High Tax, High-Spending State
How Rhode Island Compares: State and Local Taxing and Spending, an analysis, compares RI’s revenues and expenditures to those of the 49 other states and the New England region. Using the most recent data from the U.S. Census Bureau (FY 2023), the report shows how Rhode Island’s fiscal profile has shifted over time and how it aligns with and diverges from national and regional trends.
Across 31 revenue and spending categories, the report offers 50-state rankings that reveal how state and local tax collections and public expenditures in Rhode Island measure up.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“Comparative analysis of taxing and spending among state and local governments offers valuable insights for policymakers and the public,” said Michael DiBiase, President and CEO of RIPEC. “Rhode Island continues to rank among the higher-spending and higher-taxed states in the nation. As revenue growth slows, policymakers will need to focus their energy on controlling spending and promoting competitiveness and economic opportunity in the Ocean State. Understanding where we overtax and overspend relative to other states is an important starting point in that effort; policymakers should be asking why we are markedly outspending not only the nation but also other New England states in areas like public safety and government administration. It is also critical to focus on areas of underinvestment that support economic growth, like higher education.”
Key Findings by RIPEC
Revenues
• Total state and local revenues (including federal aid) ranked 18th highest per capita and relative to personal income.
• Federal aid ranked 7th highest per capita and 10th by income, reflecting a relatively high allocation of pandemic relief.
• State and local taxes were $6,879 per person, ranking 20th per capita and 18th by income, down from 13th and 12th in FY 2018.
• Making up the biggest share of tax revenues, property taxes drove the decline in Rhode Island’s total tax ranking. While growing much more slowly than state tax revenues, property taxes remained high nationally (10th per capita, 7th by income).
Expenditures
• Total spending was $14,375 per person, ranking 17th per capita and by income.
• Spending was concentrated in social services and income maintenance (primarily Medicaid) and education—each making up nearly a third of total spending.
• Spending on social services and income maintenance grew by 32.6% per capita since FY 2018, while overall spending grew 15.0%.
• Rhode Island ranked in the top ten for K-12 spending (9th per capita and 6th by income) but in the bottom ten for higher education (44th per capita and 42nd by income).
• The Ocean State is a regional and national outlier in public safety spending—5th per capita and 1.4 times higher than New England. Police and fire were especially high (5th and 3rd per capita), and corrections (14th) increased in rank by about ten spots in five years.
• Rhode Island was also an outlier in government administration spending— 5th per capita and 1.5 times the New England total.
• Boosted by federal aid, highway spending jumped substantially in rank from FY 2018 to FY 2023 (35th to 26th per capita).
• Housing and community development spending ranked 6th highest per capita, driven by federal aid.
• Parks and recreation spending was less than half the U.S. total and ranked second lowest (49th) per capita.
“Rhode Island state and local governments used federal funds—including generous pandemic aid—and increased tax revenues to spend over $14,000 per person in FY 2023,” DiBiase said. “In areas like public safety, K-12 education, government administration, and housing and community development, this spending ranks us in the top ten nationally. We also saw high growth in social services and income maintenance, corrections, and highways. Targeted government investment can help spur economic development, but questions remain as to the efficiency of spending at this level, and what residents are receiving in return.”