Overview:
Gov. Dan McKee says his plan is a response to the end of federal pandemic-response funding.
Call it a return to reality budget for Rhode Island.
For the first time in recent history, Gov. Dan McKee’s $13.68 billion spending plan for 2024-25 reduces the amount envisioned to run the state for the next fiscal year, if only by a relatively paltry $335 million.
Introducing the proposal, McKee touted his plan as an effective one for the fiscal transition caused by the end of a gusher of federal COVID money.
“While my administration had to close a modest deficit, we must stay the course in making progress toward our Rhode Island 2030 goals,” the governor said. “We will do this through the effective implementation of existing programs and making prudent, targeted investments that raise incomes for all families, increased educational attainment for all children, and improve health outcomes for all Rhode Islanders.”
McKee’s budget avoids broad-based tax increases, proposes four questions on the November ballot representing $345 million in potential borrowing and allocates an additional $135 million toward various healthcare needs.
One ballot question, if approved by voters, would steer $100 million toward building what officials call affordable and middle income housing, and related needs.
Another proposes a total of $135 million in borrowing for a new biomedical sciences building at URI and a building for the cybersecurity program at Rhode Island College. Two additional ballot questions would help fund a state archives ($60 million) and “green economy” improvements at ports, the Cliff Walk in Newport and local recreational facilities ($50 million).
McKee’s budget recommends a $64 million increase in K-12 education funding, $7 million more for the state’s three institutions of higher learning, and $435 million in related capital improvements over five years. It also seeks $10 million toward closing an $18 million deficit at public transit agency RIPTA.
The governor’s spending plan includes $80 million for a new approach to offering coordinated behavioral healthcare services known as Certified Community Behavioral Clinics, envisioning 10 such entities across the state.
While the budget does not include additional money to address a shortage of primary care doctors in the state, it does steer $10 million more to nursing homes and $51 million — in what is intended as part of a three-year plan —to correct underfunding of Medicaid, the health insurance program for low-income individuals.
The governor’s budget would boost the per-pack tax on cigarettes by a quarter, to $4.50, raise the exemption for taxable retirement income from $20,000 to $50,000, and cut the corporate minimum tax from $400 to $350.
As the Rhode Island Public Expenditure Council noted in a report last week, the state’s $14 billion current budget for 2023-2024 is 46.3%, or $4.4 billion, more than the spending plan for 2018-2019 — the last budget before the pandemic. During the GOP response to McKee’s State of the State address on Tuesday, House Republican Leader Michael Chippendale called on Democrats to do more to constrain state spending.
During a briefing for reporters, state budget officials painted a positive picture, highlighting that state revenues are growing at a higher rate (2.6%) than inflation (2.2%).
“Even though we do have some softness in revenues, we’re still growing — we’re not in a recession — and we’re hoping to increase that revenue growth in the out-years,” said state Office of Management and Budget Director Brian Daniels.
At the same time, the surpluses of the last two budgets remain anomalous in a state historically marked by a structural deficit, and Rhode Island’s long-term outlook has worsened to the extent that it faces a projected $244 million deficit for fiscal 2026 and red ink well into the future. (The budget has to be balanced before the end of the next fiscal year in July.)
In an interview, Daniels said some of the spending is meant to improve how Rhode Island compares with Connecticut and Massachusetts on the payer mix for health and human services, and that doing so could strengthen the state’s standing over time.
The General Assembly will hold months of hearings on the governor’s proposed budget before making changes and passing a spending plan in June.
Ian Donnis can be reached at idonnis@thepublicsradio.org
