News Summary
The Rhode Island Senate Finance Committee has approved a $14.3 billion budget focusing on healthcare, homelessness, transportation, and childcare as fiscal year 2026 approaches. The budget aims to protect Medicaid while addressing urgent healthcare needs across the state. However, it includes cuts to the Rhode Island Public Transit Authority, resulting in job losses and reduced services. New taxes, including a 2-cent gas tax increase and a ‘Taylor Swift tax’ on high-value homes, have been introduced amidst balancing fiscal constraints and community support.
Providence — The Rhode Island Senate Finance Committee has approved a $14.3 billion budget for the fiscal year 2026, which includes critical funding for healthcare, homelessness, transportation, and childcare. The budget outlines a significant future direction for the state as it prepares for the new fiscal year, which begins on July 1.
The budget has been designed to protect Medicaid and tackle urgent healthcare needs across the state. Key allocations include over $40 million dedicated to primary care, $30 million for hospitals, and $14 million for nursing homes. The full Senate is expected to conduct a vote on the budget on Friday, a crucial step before the new fiscal year commences.
Amid these financial commitments, the Rhode Island Public Transit Authority (RIPTA) will experience budget cuts. Initially facing a $32 million budget gap, RIPTA’s shortfall was reduced to $18 million after amendments were made to the budget. However, the agency will still need to eliminate 90 jobs and reduce service by 20 percent across its routes. Importantly, there will be no reductions to “door to door” service for passengers with disabilities, emphasizing a commitment to accessibility.
In addition to the cuts, new taxes have been introduced in the budget, including a proposed 2-cent increase in the gas tax aimed at funding RIPTA and assisting with its deficit. Furthermore, a new property tax termed the “Taylor Swift tax” has been approved for non-owner-occupied homes valued over $1 million, which has drawn criticism for potentially impacting those whose vacation homes have seen significant appreciation.
Lawmakers found themselves balancing pressing needs against financial constraints, acknowledging an approximately $250 million deficit for the state. Despite these fiscal challenges, the budget includes provisions aimed at maintaining support for vulnerable populations. The House has also moved to extend a state program that helps subsidize childcare for providers, reflecting ongoing concerns about affordability and access.
Following the House’s earlier approval of the budget with a vote of 66-9, the Senate’s decision marks a pivotal moment for fiscal planning in Rhode Island. The approved budget is about $120 million more than Governor Dan McKee’s original proposal, reflecting the additional funding needs identified by lawmakers.
Opposition to certain aspects of the budget emerged, particularly concerning the “Taylor Swift tax” and the proposal to raise income taxes for wealthier residents, emphasizing the need for careful consideration of who will be affected by these new measures. Lawmakers resisted suggestions to increase income taxes, focusing instead on maintaining a budget that addresses immediate financial deficits without exacerbating the tax burden on high-income individuals.
The budget also specifies an increase in the local hotel tax from 1% to 2%, targeting revenue from the tourism industry to support state initiatives. Lawmakers are under pressure to ensure that funds collected, particularly those from the hotel tax, are allocated efficiently to address community needs.
Beyond these immediate measures, the state awaits the signature of Governor McKee on a bill that plans to raise the minimum wage from $15 to $17 over the next two years, looking to improve wage standards for workers across Rhode Island. In addition, concerns have been raised regarding a settlement handled by Attorney General Peter Neronha related to the allocation of funds to children’s dental care, further emphasizing the nuances involved in the state’s budgeting process.
As fiscal year 2026 approaches, future sessions may be required if federal budget cuts affect state funding, particularly in vital areas like Medicaid and nutrition assistance, indicating that the budget process remains an evolving discussion within Rhode Island’s legislative framework.
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