Gov. McKee releases FY 2026 budget, details plan to resolve deficit

PROVIDENCE, R.I. (WLNE) — Gov. Dan McKee released his proposed Fiscal Year 2026 budget Thursday.

McKee had previously said his aim with the $14.2 billion budget was to resolve a $250 million deficit without tax increases.

“Over the next five years, state revenues are expected to grow 2.5% each year thanks to our strategic investments and strong economy,” McKee said in his State of the State address. “During the same time, state spending is expected to increase at 3.7% per year.”

“My budget provides a roadmap to close an approximately $250 million deficit without any broad-based tax increases,” he continued. “This budget will not just protect Rhode Island’s progress; it will protect the taxpayers of our state.”

The budget proposal included a suggested increase to cigarette taxes, an additional tax applied to short-term rentals, as well as a new electric vehicles fee.

As the governor previously referenced, the plan proposed an assault weapons ban with a tax exemption for gun safety goods like lock boxes and safes.

The governor’s office also outlined released key goals of the budget, which include:

• Investing in Rhode Island’s education and workforce, including $2.5 million for Learn365RI municipal grants, increasing K-12 education aid by $43.4 million, and investing $6 million in general revenue and Jobs Development Funds to create 1,000 new work-based learning opportunities.
• Upgrading the state’s infrastructure by investing $6.5 million more in RhodeRestore to defray transportation and infrastructure project costs.
• Promoting health and wellness by proposing an assault weapon ban, recommending primary care provider rates be reviewed by the Office of the Health Insurance Commissioner, and increasing funding for senior support services from $1.4 million to $1.6 million.
• Creating government efficiencies by recommending the purchase of a large, commercial building in East Providence to co-locate multiple state agencies as well as pursuing strategic cost-cutting measures across state agencies.
• Creating a sustainable funding stream to address homelessness, including $15.7 million for homelessness initiatives.

The Rhode Island Hospital Association expressed concern with the budget plan, specifically the proposal of over $25 million in cuts to hospital funding.

Interim President Howard Dulude released the following statement on the proposal:

“The governor’s budget proposal will only make a bad health care situation worse for Rhode Islanders. Hospitals are already facing significant challenges due to low reimbursement rates and these cuts will further strain hospitals, forcing them to continue to make difficult decisions to stay afloat, including laying off staff and cutting services.

A recent poll conducted by SocialSphere revealed that more than half of Rhode Islanders faced difficulty accessing health care in the last year, with one-third struggling to schedule appointments with specialists and many resorting to emergency rooms instead. HARI warns that the proposed cuts could worsen these challenges, leaving residents without timely or adequate care.

These cuts will have real consequences for Rhode Islanders, who are already facing long wait times for appointments, with many residents unable to see the specialists they need. This budget proposal will only add more barriers and delays in care across the state.

Rhode Island also faces a significant shortage of health care workers, with many leaving for higher-paying opportunities in neighboring Massachusetts and Connecticut. According to the SocialSphere poll, 78% of Rhode Islanders support increasing reimbursement rates to match neighboring states, with particularly strong backing for Medicaid payment increases. The persistently low reimbursement rates have made it difficult for hospitals and health systems to offer competitive pay, leading to the state’s inability to attract and retain health care professionals.

Rhode Island needs to address the root cause of the health care crisis–low reimbursement rates–by increasing Medicaid reimbursements for physicians and hospitals and ensuring private insurer payments are competitive with Massachusetts and Connecticut.

Delaying action will only harm Rhode Islanders. HARI and its members are committed to working with the General Assembly and the Governor to secure more federal funding, strengthen our healthcare workforce, and meet the needs of all Rhode Islanders.”

The Working Families Party of Rhode Island also released the following statement in reaction:

“The governor doesn’t have a funding problem, he has an allegiance problem. He says he’s committed to “progress and promise,” but these proposals are more like “promise over progress.” He’s promised to protect the bank accounts of a handful of multi-millionaires, corporate CEOs, and their lobbyists – the people who [President-elect Donald] Trump and [Elon] Musk are about to make even richer. That promise comes with a clear cost: there’s “no room” in the budget for the things that actually help working people, like lowering the costs of prescriptions, helping with utility bills, or making sure families have a roof over their heads. That’s not progress. Real progress for working people requires standing up to the millionaires and corporate lobbyists who refuse to help make the majority of Rhode Islanders lives a little easier. Until Gov. McKee takes that stand, it’s clear whose side he’s on.”

The full proposed budget can be found here.