Rhode Island Gov. Dan McKee used his State of the State speech Tuesday to emphasize a series of proposed tax cuts, while also offering an optimistic message about the state’s future and vowing progress on such long-running challenges as underperforming schools and the housing crisis.
One of McKee’s targets is the 7% sales tax, which, he said, is the second-highest in the nation and something that should have been cut to its previous level after the state recovered from the 1990 banking crisis.
“We’re going to propose a fiscally-responsible, incremental reduction of the sales tax,” the governor said in his prepared remarks. “ Let’s start by reducing our sales tax to 6.85 percent — approximately $35 million dollars a year of long overdue relief — and if we continue to have discipline in our budgets and get to the same rate as Massachusetts — we would save Rhode Islanders $173 million annually.”
The sales tax in Massachusetts is 6.25%, while in Connecticut, it is 6.35%
Other tax proposals outlined by McKee:
— Stopping the 3-cent increase in the state gas tax planned for July 1.
— Giving Rhode Islanders a rebate for the gross receipts tax on winter energy bills, a total of $35 million.
— Eliminating a so-called litter tax paid by businesses.
— Reducing the corporate minimum tax.
McKee said $1.2 billion in federal funding is flowing into projects statewide, creating a foundation for economic growth. He said the allocation of the money was guided by the Rhode Island 2030 plan, which grew from a series of community meetings.
The governor claimed credit for moving the state forward.
McKee became governor in March 2021 when Gina Raimondo became Commerce secretary in the Biden administration, and he won a full four-year term in November by beating Republican Ashley Kalus by 19 points.
“Over the past two years, we’ve laid a strong foundation by not only making short-term investments in our state’s families, small businesses, and workforce – but we’ve also put into place strategies and investments to ensure Rhode Island’s long-term economic success,” McKee said. “As I look out at this audience tonight, I am more optimistic than ever about Rhode Island’s future. And I hope you feel the same way too.”
McKee’s full budget for the fiscal year starting July 1, boosted by an estimated $610 million surplus, is set to be introduced Thursday. The General Assembly will spend months reviewing the spending plan before passing a revised version with a series of changes.
As is traditionally the case, McKee delivered the State of the State address in the House of Representatives’ chamber at the Statehouse, with various dignitaries in attendance, including other state and municipal officials, judges, and public university presidents.
The governor noted the presence of Amin Faqiry, an Afghan refugee who worked for the U.S. government as a translator for more than 10 years, and Jonathan Dator, associate director of a counseling center at Providence College, whose friendship with Faqiry helped smooth the path for his arrival in Rhode Island in 2021.
RI Senate GOP Leader Jessica de la Cruz of North Smithfield gave the Republican response.
She asked why Rhode Island, in her view, is so timid in cutting taxes, and said the sales tax should go to 5 percent and a refund to taxpayers. She faulted the McKee administration’s early efforts on housing, and said parents should get more choice on where they can school their children.
On schools, McKee said there’s no time to waste in moving forward. He also said his administration will deliver within the first 100 days of his full term a plan aimed at reaching the performance of Massachusetts’ students by 2030.
For now, the governor touted a wave of school-building projects across the state — made possible by borrowing approved by voters. He said his budget will include $57 million for K-12 schools, an additional $4 million for out of school learning programs, and full funding for multi-language learners and special education.
McKee said his budget will also include money to staff up the Department of Housing and put unhoused people on the path to permanent housing. The slow pace of progress on addressing the state’s long-running housing crisis was a factor in the resignation last week of Housing Secretary Josh Saal.
The governor said his budget will include a major investment meant to support the life sciences industry in the state, a subject championed by House Speaker Joe Shekarchi.
McKee called on lawmakers to pass a ban on what some call assault weapons, saying he would sign the measure into law.
The governor said his budget will propose money for the state’s rainy day fund and set aside money for future obligations to reduce reliance on debt.
The former Cumberland mayor also pledged to go after a pet peeve for Rhode Island drivers.
“Potholes are a problem and we all know that they exist,” McKee said. “That’s why, I’m putting on my former municipal leader hat and proposing that we launch a new matching grant program to help our cities and towns repair local roads while we continue to do the work to repair state roads across Rhode Island, just like we did on route 295 which I drive on every day.”
Ian Donnis can be reached at idonnis@ripr.org. Follow him on Twitter @IanDon.
