PROVIDENCE – The R.I. House on Friday approved a $15.2 billion state budget plan for fiscal 2027 by a 64-10 vote, including a phased-in wealth tax and funding for an inspector general’s office.
The tax-and-spending package was approved by the House Committee on Finance on May 29.
Forty-five percent of the fiscal 2027 budget will go towards healthcare and human service programs such as Medicaid, expiring ACA subsidies, hospitals, behavioral services, nursing homes and long-term care facilities.
A roughly $900 million increase from the previous year and $344 million more than Gov. Daniel J. McKee’s proposed $14.86 billion plan, the revised budget plan includes the full $116 million Medicaid reimbursement rate increase for home and behavioral health providers and adds $26 million in state funds to hospitals.
McKee had sought what has been referred to as a ‘millionaires tax’ of 8.99% on income over $1 million, projecting $67.1 million in additional revenue in fiscal 2027 and $135.5 million in fiscal 2028.
The House version opts for a three-year phase in of the tax, beginning with 6.99% in the next fiscal year, 7.99% in year two before moving to 8.99% in year three, netting around $22 million in the fiscal 2027 budget and $136 million annually after the phase in.
House Speaker Chris Blazejewski, D-Providence, called the budget “an effort to address the concerns and struggles of everyday Rhode Islanders who need good schools, who need access to healthcare, who need to be able to pay their bills and who need to know that their government is honest and effective.
”It provides relief today while being fiscally responsible and putting our state in a better position in the years to come,” he said.
The inspector general’s office, proposed by Blazejewski, was necessary to curb tax-dollar waste and prevent repeats of recent debacles related to the Washington Bridge failure and state payroll system errors, he said. If does not include oversight of the General Assembly and the court system.
All told, the fiscal 2027 budget adds 70 positions to the state employee count, including 12 positions to staff up the inspector general’s office.
The House retained a $600 million infrastructure bond package, a $120 million housing bond issue and a $50 million cultural economy bond for grants to cultural institutions and a state archives and history building, all to be placed on the statewide ballot in November.
R.I. Secretary of State Gregg M. Amore issued a statement after the House included the $45 million bond question for the construction of a Rhode Island State History Center.
“The proposal has been refined over time, carefully balancing visitor experience, archival specifications, and cost, culminating in a project that truly honors our state’s rich history,” he said.
McKee had submitted a budget amendment to replenish the $18 million in the state’s “rainy day fund” that was earmarked to facilitate the sale of Roger Williams Medical Center and Our Lady of Fatima Hospital. The House version kept that proposal but adds an additional $6 million toward the fund.
The budget also includes the first year of McKee’s three-year proposal to eliminate state personal income taxes on Social Security benefits.
Funding to K-12 schools was boosted $17.5 million. And the R.I. Public Transit Authority received a $7 million boost above what McKee proposed.
“Times are tough for many and this budget addresses these issues while offering the support and investment that Rhode Islanders need and deserve,” said finance committee Chair Rep. Marvin Abney, D-Newport.
Rhode Island's state budget has increased by nearly $6 billion dollars since 2017, a factor not lost on House Minority Leader Michael Chippendale, who said raising income taxes on higher earners - and by turn many sole proprietorship businesses - will only exasperate the problems facing the state.
“There’s going to be more people needing the services we provide and less people paying for them,” he said.
A floor amendment provided an additional $1 million for the Rhode Island Community Food Bank, increasing the total to $2.95 million.
The General Assembly must approve a final spending plan before the new fiscal year beginning July 1.
The Senate Finance Committee is scheduled to vote on the budget on June 8.
If approved, the full Senate will then schedule a budget vote.
After the Friday vote, the House Republican Caucus lambasted the budget as another example of an unsustainable fiscal path.
“Rhode Islanders deserve a budget that is disciplined, honest and focused on outcomes,” said Chippendale. “This one is bigger, more expensive and still unwilling to face the reasons our state remains unaffordable and uncompetitive.”
Other items included in the budget:
- Added over $24 million above McKee’s proposal to fully fund direct state education aid to K-12 schools.
- A ballot question for $275 million in borrowing, including $165 million for a new Integrated Health Building at URI; $50 million for renovations to the Adams Library at Rhode Island College; and $60 million for the Workforce Innovation Center at the Community College of Rhode Island's Warwick campus.
- Extension of the Hope Scholarship for an additional three years.
- Adding a new refundable child tax credit of $330 per child.
- Total green bond ballot question of $55 million.
- $20 million to expand access to health insurance through Health Source RI.
- $1.6 million for the Newport Hospital Birthing Center.
- $5 million for startup costs for the proposed new medical school at the University of Rhode Island.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
