PROVIDENCE – A key House panel on Tuesday approved a $14.3 billion fiscal 2026 state budget plan by an 11-3 vote, prioritizing funding to health care, education and public transportation.
The tax-and-spending package approved by the House Committee on Finance is a roughly $500,000 decrease from the previous year but $120 million up from Gov. Daniel J. McKee's plan unveiled in January.
It now moves to the full House for a vote.
In a prehearing budget briefing, House Speaker K. Joseph Shekarchi said the spending plan is "about making choices," adding that McKee's $14.2 billion spending proposal for the next fiscal year left lawmakers scrambling to handle 27 budget amendments.
"This budget was a moving target," he said. "There were a lot of unforeseen holes as we went along."
Shekarchi said that with uncertainty at the federal level and slim revenue-to-expenditure margins, the House proposal targets the biggest needs for Rhode Island, including a $45 million infusion to fund increases in reimbursement rates for primary care doctors.
The budget plan addresses a projected $250 million budget deficit in fiscal 2026, with spending expected to increase 3.7% on average over the next five years and revenue expected to grow by 2.5%.
"We addressed the issues for the critical needs with the resources available to us," said Shekarchi. "You put out the fire that's closest to you."
The House plan sets aside $22 million in additional funding for the Washington Bridge rebuild and includes roughly $12 million to nursing homes and $38 million to hospitals.
It also increases the gas tax by 2 cents to 3 cents per gallon and directs the additional revenues to the R.I. Public Transit Authority, which is facing a budget deficit in excess of $30 million.
The House plan retains McKee's proposal to apply the 5% tax on the short-term rentals to entire homes, which currently only applies to single rooms or hotels. And it increases the real estate conveyance tax paid for properties more than $800,000 to 2%, up from the .92% assessed currently. It would also implement a new fee on nonowner occupied homes of about 50 cents per $1,000 of assessed value.
Left out was a proposal by McKee to levy a 10% tax on digital advertising for companies with more than $1 billion in annual revenue and the administration's plan to consolidate the Adult Correctional Institution’s minimum and medium security prisons.
While Shekarchi said there was no additional money available to directly supplement funding for the long-vacant Superman Building in downtown Providence, the revised budget includes provisions in legislation now before the General Assembly that would allow the developer High Rock Development to reap $4.6 million in savings on construction costs through two programs run by R.I. Commerce Corp.
The full House is scheduled to vote on the state budget June 17 before it goes to the Senate. But Shekarchi left the door open for the legislature to reconvene later in the fall.
In a statement Tuesday, Senate President Valerie J. Lawson highlighted the investments in health care, public education and RIPTA, which she said "better position the state to respond to uncertainty at the federal level, and addresses many other critical needs, from homelessness to aid to cities and towns."
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
