R.I. economic report cites cost of Medicaid, fire protection

Cynthia Needham

Oct. 13, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- PROVIDENCE -- Rhode Island spends nearly double the national average on its fire-protection services, while expending significantly less than other states on higher education, highways and parks.

According to a new report released Tuesday by the Rhode Island Public Expenditure Council, the Ocean State also had the second-highest per capita spending on Medicaid, where expenditures have nearly doubled in the course of a decade, rising at a faster rate than other states.

The 36-page survey by the business-backed agency compares Rhode Island with other states based on government finance data from the U.S. Census Bureau. It covers the budget year that ended in 2007, the latest year for which national data are available.

The results offer a broad-brush overview of Rhode Island's spending habits.

"Overall, we are a state that has a very high level of spending and a very high level of taxation," said RIPEC Executive Director John Simmons.

A separate report released by the agency in earlier this month suggests that Rhode Island has the 15th-highest total tax burden nationwide.

"The priorities that have been made over time can be very contrary to other jurisdictions," he added.

Simmons cites the Medicaid numbers as the study's most dramatic. "Fundamentally, our whole safety net seems to be moving money to Medicaid and moving it much faster than other states," he said.

Over the course of the past year, Rhode Island's "global Medicaid waiver" has altered the way it allocates Medicaid insurance dollars. Yet that plan assumes that total Medicaid spending will continue to increase in years to come.

In some instances, Rhode Island's rankings don't differ much from its neighbors in Massachusetts and Connecticut.

All three Southern New England states devote a significantly smaller amount to support higher education when compared with most other states, the report shows.

This state ranks 45th in higher-education spending per $1,000 of personal income, while Massachusetts sits at 47th and Connecticut falls dead last at 50th.

Such bottom-rung rankings may seem out of place given New England's strong ties to education, though the report suggests that the numbers may reflect "the region's tradition of private colleges."

But Simmons warns that tradition comes at a potential price. "If we have only a private-sector model, then it becomes an affordability issue," he said.

On elementary and secondary education, Southern New England states rank at the opposite end of the spectrum, with all three spending in the top 11 per capita (Rhode Island is eighth).

There is value to that kind of investment, Simmons notes. But it also raises the tricky question of whether those expenditures are worth it for the high property tax burdens that result.

According to RIPEC: "The cost of education in the state is largely borne by municipalities, which, in part, is a significant driver of the property tax burden."

In other areas, Rhode Island's spending habits again fall out of sync with other states. When it comes to fire protection, the state not only spends nearly double the national average, but also significantly more than its New England neighbors, as it has in previous years.

The same is true for government administration costs -- expenditures related to financial administration, as well as judicial and legal services. Rhode Island has the 5th-highest administrative spending, while Massachusetts ranks 22nd.

To read the study in full, visit the RIPEC Web site at www.ripec.org; the report is expected to be online by Tuesday afternoon.

Newstex ID: KRTB-0161-38826130