PROVIDENCE – A key House panel on Friday approved a $15.2 billion fiscal 2027 state budget that includes a phased-in wealth tax and funding for an inspector general's office.
The tax-and-spending package approved 13-2 by the House Committee on Finance is a roughly $860 million increase from the previous year and $344 million more than Gov. Daniel J. McKee’s proposed $14.86 billion plan.
It now moves to the full House for a vote.
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 to use 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.
In a pre-hearing budget briefing, House Speaker Chris Blazejewski, D-Providence, said the House version chooses an approach with “less shock” to high-income earners.
Blazejewski said the state could afford a lesser hike in fiscal 2027 than the governor proposed but added that “the out years are concerning.”
”We wanted to make sure we had revenues coming online,” he said. He did not say how much the phased tax is projected to generate each year.
The roughly $2 million requested for a new inspector general's office proposed by Blazejewski was included in the House plan, a move he said was necessary to curb tax-dollar waste and prevent repeats of recent debacles related to the Washington Bridge failure and state payroll system errors, particularly in light of what he characterized as an increasingly unfriendly White House administration.
“Our relationship with the federal government is changing,” he said. “We need to make sure our state government is working.”
The inspector general's oversight would not include the General Assembly, which Blazejewski said was due to a desire to maintain separation of powers between the legislative and executive branches.
The House plan retains McKee’s proposal to invest $5 million toward the creation of a medical school at the University of Rhode Island. It also increases funding to R.I. Public Transit Authority by $7 million over McKee’s plan.
McKee also wanted to double the per-child tax credit to $650 per child at a cost of $33.5 million in the next fiscal year. Instead, the House plan retains the dependent exemption but adds a provision exempting those earning over $100,000 or joint filers earning more that $150,000.
The House also retained a $600 million infrastructure bond package and the $120 million housing bond issue to be placed on the statewide ballot in November.
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 keeps that proposal but adds an additional $6 million toward the fund.
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.
Additional items removed from McKee’s proposal include:
- Increasing cruise ship passenger fees in Newport.
- A constitutional amendment to give the governor budget line-item veto power, which could be overridden by a three-fifths vote of the legislature.
- Repeal of the 2-cent motor fuel tax increase enacted by the General Assembly in the fiscal 2026 budget.
The full House is scheduled to vote on the state budget June 5 before it goes to the Senate.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
