The coronavirus crisis has underscored one of the facts of life: a robust government is impossible without a robust economy. The government does not produce money; the people do. Even the very recent shutdown of much of the Rhode Island economy — including the casinos and such small businesses as restaurants, bars, shops and spas — has left the state scrambling to find enough money to keep going.
Along with tumbling income- and sales-tax revenues, the government is contending with a huge spike in unemployment claims.
“It would be hard to overstate the severity of the challenge we face,” Senate President Dominick Ruggerio wrote to his colleagues.
In a letter to his fellow House members, Speaker Nicholas Mattiello explained that the shortfall in revenues “can be managed through short-term borrowing ... We are [also] evaluating the extent to which approved and pending federal aid will assist us in covering these budget gaps.”
An extension of the deadline for tax filings from April 15 to July 15 has exacerbated the problem.
“This time of year, before the usual April 15 tax filing deadline ... there is an influx of revenue,” Mr. Ruggerio wrote. But “now as a result of the pandemic, revenue has been significantly constrained.”
Both chambers of the General Assembly are shut for now, to try to help prevent the spread of the virus. But numbers-crunchers and leaders are busy at work, in consultation with Gov. Gina Raimondo and General Treasurer Seth Magaziner, assessing where Rhode Island stands and what must be done.
Before the crisis hit, the state was already dealing with a $200-million budget deficit and a spending plan proposed by the governor that used some exceedingly optimistic ideas to make ends meet.
Now it is anyone’s guess how high the deficit will soar.
Even if leaders wanted to hammer those who are still working, the state lacks the ability to hike taxes high enough or quickly enough to cover the gap.
That will require leaders to engage in some unpleasant triage. They will have to prioritize the most important things government does: providing essential services and protecting the neediest among us.
New or expanded programs will surely face the chopping block. Nonessential workers will have to go. Indeed, the cutting should start now.
There will be enormous pressure to use state government, beyond unemployment and welfare programs, to ease the pain of virus-induced hard times. But the state will have to take care that it does not choke off an incipient recovery later this spring and summer by making life even harder for people trying to get back on their feet, by hitting businesses and workers with new taxes and regulations.
Our leaders are engaged in the difficult task of trying to minimize contacts to prevent the spread of a virus that could kill large numbers of people. At the same time, they must not crash the economy for months to come, lest Americans suffer vastly more.
Fortunately, Rhode Island’s leaders are not sugar-coating the threat. Rather, they seem to be studying the landscape soberly and pragmatically, and planning the best response.