PROVIDENCE – By a 34-1 vote, the Senate around midnight approved a $13.9 billion fiscal 2025 budget, the final deliberation before the spending package is transmitted for Gov. Daniel J. McKee’s signature.
Lawmakers conducted an hourslong floor session Thursday into Friday morning that wrapped up General Assembly business until the legislature reconvenes in January.
The budget is a $271 million increase over McKee’s proposal unveiled in January. He is set to sign the document – a 46% increase in spending over fiscal 2019 – on June 17 inside the State Room of the Statehouse.
The final version boosts funding for public education and health and human services, and implements changes to the state pension system by giving cost-of-living increases to beneficiaries who retired before 2012 and reduces the percentage threshold for all other beneficiaries. It also raises the pay retired educators can earn without losing benefits from $18,000 a year to $25,000. And provides the same pension benefits available to municipal public safety workers to their state counterparts.
Senate Finance Committee Chairman Louis DiPalma, D-Middletown, called the budget "forward thinking" and "based on facts and data without putting undue burdens upon the taxpayers."
"It meets the needs of today with an eye on Rhode Island’s future," he said.
The assembly’s revised budget includes full funding to the tune of $160 million for Medicaid reimbursement rate increases that McKee had proposed addressing with a three-year phase-in.
House Finance Committee Chairman Marvin Abney D-Newport, said that given the end of the previous federal influx of relief dollars, the plan puts the state "on sound financial footing.
"This budget takes care of and supports our residents, families and children without putting any additional financial burdens on the people of Rhode Island," he said. "Many of whom are struggling due to the higher costs of daily life we are now seeing."
Among the last-day legislation approved Friday was a Citizens Bank – supported change from the way banks are taxed by moving to a so-called “single-factor” methodology. The Senate approved it by a vote of 30 to 6.
Administration officials said that if enacted, it would have resulted in $7.7 million in lost revenue this fiscal year, growing to $15.6 million over the full fiscal 2025.
DiPalma said the change would not impact the current budget after lawmakers shifted $1 million of surplus money from the fiscal 2024 budget and an additional $6.5 million that was to go to the so-called “rainy-day” fund.
The budget adds $1 million for small businesses financially impacted by the Washington Bridge closure – bringing the total to $2.6 million – and increases funding to the R.I. Public Transit Authority by $5 million. There is $84 million toward the replacement of the bridge, now estimated to be roughly $400 million. The revised budget also adds $33.8 million over McKee’s proposal in state aid to K-12 public schools and provides $813,000 toward free breakfast and lunch meals for students who are otherwise eligible for the federally reduced rate.
The General Assembly also authorized several bond questions to be put before voters on the November ballot, including a $120 million housing bond, the largest in state history.
Lawmakers increased the initial housing bond proposal by $20 million and also authorized using up to $10 million for public housing.
There is an $87 million education facilities bond to build a Biomedical Sciences Building at the University of Rhode Island and a $73 million question to pay for the new Institute for Cybersecurity and Emerging Technologies at Rhode Island College.
There is also a $10 million arts bond for cultural facilities; and voters will decide on a $13 million “green bond" managed by the R.I. Department of Environmental Management.
Figures from the May Revenue Estimating Conference projected a nearly $243 million surplus over the current fiscal year budget, with state revenue for fiscal 2025 exceeding earlier projections by nearly $60 million.
The approved budget included McKee's proposal to redirect $10 million in unspent federal relief funds to nursing homes.
The proposal increases the per-pack tax on cigarettes by 25 cents.
The most trenchant debate was over the banking tax reform, which Sen. Samuel Bell, D-Providence, called an "e
xtreme procedural anomaly" because legislation with fiscal implications was passed outside of the budget after failing to be included on its first attempt through a McKee amendment.
The R.I. Public Expenditure Council last week praised lawmakers for retaining McKee’s proposal to extend the period that businesses can carry forward net operating losses from five to 20 years, making the state code more consistent with neighboring states.
But with a projected deficit of nearly $250 million for fiscal 2026 and increased state spending added by the General Assembly over McKee's recomendation, RIPEC cautioned that “overall growth in state expenditures...raise longer term fiscal concerns.”
In a statement Friday, House Speaker K. Joseph Shekarchi acknowledged that given the more limited state fiscal resources, the spending plan was crafted with a collective eye toward addressing "students and children first, while addressing our challenges, such as housing and health care."
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
