Rhode Island House Finance Committee Approves $14.3 Billion Budget

Categories: Rhode Island Business NewsRhode Island News

Illustration representing the Rhode Island budget proposal focusing on transportation and infrastructure.

News Summary

The Rhode Island House Finance Committee has approved a $14.3 billion budget proposal for the 2025-2026 fiscal year, incorporating new taxes and fees for drivers, particularly impacting electric vehicle owners. Critics argue the plan will burden working- and middle-class families, while lawmakers defend it as necessary funding for vital public services like education and transportation. The full House will review the budget next, amid discussions of increasing gas taxes and registration fees. The budget is touted as crucial to address a significant projected deficit and maintain state programs.

Rhode Island House Finance Committee Approves $14.3 Billion Budget Proposal, Raising Taxes and Fees for Drivers

Rhode Island’s proposed state budget for the 2025-2026 fiscal year has been approved by the House Finance Committee in an 11-3 vote. The budget totals $14.3 billion and includes new taxes and fees aimed at funding essential public services such as education, health care, and transportation.

Among the proposed financial changes are new fees specifically targeting drivers, especially those operating electric vehicles (EVs) and hybrids. These fees have been introduced to compensate for the absence of gas tax contributions from electric vehicles, which are exempt from gas taxes intended to maintain road infrastructure. This decision has raised concerns among motorists who feel burdened by the increased costs.

House Minority Leader Mike Chippendale stated that electric vehicles disproportionately affect roads, causing approximately 30-40% more damage due to their weight. This has led to increased costs for all drivers, as the burden of road maintenance is shared among all vehicle owners. Motorists like Michelle Tucci have voiced concerns over the feasibility of these fee increases, stressing that many do not have an extra $10 available at the end of the week. Similarly, electric vehicle owners like Ryan Commo argue that the newly imposed fees add strain to their budgets, making EV ownership less financially viable.

Despite vocal opposition, the budget does not feature a proposed income tax increase on high earners, an idea that was championed by some progressive lawmakers. Critics of the budget argue that it disproportionately impacts working- and middle-class families, who may struggle to cope with increased transportation costs.

The full House is slated to review the budget next Tuesday, after which it will move to the Senate for further deliberation. In addition to the proposed fees, motorists are already facing a planned one-cent increase in gas tax effective July 1, 2025, raising the total to 40 cents per gallon. An additional two-cent increase is expected, generating an estimated $8.7 million to support the Rhode Island Public Transit Authority (RIPTA).

RIPTA is also set to receive an extra $5.9 million from the Highway Maintenance Account in response to a significant $32.6 million deficit that the agency is facing. CEO Christopher Durand has emphasized the necessity of stable funding to ensure that transportation services remain consistent throughout the state. However, without sustainable financial solutions, RIPTA continues to confront potential layoffs and service reductions.

Currently, Rhode Island has the highest gas tax in New England, with adjustments every two years based on inflation. While some lawmakers considered a special tax on digital advertising and a hike in cigarette taxes, these measures were ultimately dismissed during budget discussions. However, education funding will see an increase of $16.5 million compared to prior financial proposals.

The allocated budget also earmarks over $40 million for primary care services, $38 million for hospitals, and $12 million for nursing homes, aided by federal matching funds. Legislative leaders have focused on enhancing health care provisions in the budgeting process.

Additionally, a new 7% sales tax on short-term parking at garages will be implemented starting January 1, and fees for traffic tickets will be raised from $85 to $100. Registration surcharges for licenses and vehicle registrations are also set to increase from $30 to $40. Annual registration fees for electric vehicles will be levied at $200, with $100 for plug-in hybrids and $50 for regular hybrids. Furthermore, a statewide property tax is being introduced for non-owner-occupied homes valued over $1 million.

The final budget plan represents a shift from Governor Dan McKee’s initial proposal made in January, as it has increased by about $119 million. This budgetary adjustment is essential to address a projected deficit ranging from $200 million to $400 million, while maintaining critical programs, such as the RIde Anywhere program that supports passengers with disabilities.