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6/18/2025
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Senate Finance Committee approves 2026 state budget bill
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 STATE HOUSE – The Senate Finance Committee today unanimously approved a balanced $14.34 billion budget for the 2026 fiscal year that closes budget gaps; bolsters Medicaid despite threats at the federal level; increases reimbursements for primary care providers, nursing homes and hospitals; and provides additional resources to address the housing crisis.
The bill (2025-H 5076Aaa) now goes to the full Senate, which is expected to vote on it Friday.
“This budget makes immediate investments to address health care, particularly the primary care crisis, and also puts us on a path for an expedited rate review. It maintains the critical investments we have made in child care and education over the past decade, better positions the state to respond to uncertainty at the federal level, and addresses many other critical needs, from homelessness to aid to cities and towns,” said Senate President Valarie J. Lawson (D-Dist. 14, East Providence). “I am grateful to Chairman Louis DiPalma and all the members of the Senate Finance Committee, as well as Speaker Shekarchi, Governor McKee, and everyone who worked tirelessly to put forth a balanced budget that responsibly addresses the needs of Rhode Islanders.”
Said Senate Finance Committee Chairman Louis P. DiPalma (D-Dist. 12, Middletown, Little Compton, Newport, Tiverton), “Difficult financial times have led to a challenging budget year, but the Senate Finance Committee followed the facts and data and helped craft a budget document that takes the needs of our state’s residents into consideration, while also planning for federal support uncertainty and unexpected future issues and situations. This is not a flashy budget, but one that continues to support everyday Rhode Islanders who are struggling to get by in the current climate.”
The bill passed the House on a 66-9 vote yesterday.
“Despite the very significant challenges we face in this fiscal year, this budget reflects our commitment to our priorities: not only protecting, but strengthening the vital Medicaid programs that provide health and safety to Rhode Island’s seniors, children, individuals with disabilities and working families; supporting our health care system, particularly the hard-working primary care providers and frontline caregivers, and addressing our housing crisis,” said House Speaker K. Joseph Shekarchi (D-Dist. 23, Warwick). “While the budget as presented to us in January included some difficult gaps that we had to close before we could consider any new programs, I’m proud of the hard work that went into ensuring that the final product puts everyday Rhode Islanders’ fundamental needs front and center. The budget is always a statement of our values, and this one says that Rhode Island is committed to the health and well-being of every member of our community.”
Said House Finance Committee Chairman Marvin L. Abney (D-Dist. 73, Newport, Middletown), “Without any doubt, this has been one of the most challenging budgets to craft in quite some time and the fiscal issues Rhode Island is facing are significant. Rising costs, federal uncertainty and a slowing economy are some of the reasons why this was a difficult budget to put together, but it also underscores the importance of passing a budget that helps and supports every Rhode Islander during these trying times. I am proud of the work the House Finance Committee and the fiscal staff put into this budget and I thank them all, as well as Speaker Shekarchi and Majority Leader Christopher Blazejewski, for their input and ideas on how to take care of our state’s residents today, while also setting up Rhode Island for future success and prosperity.”
The budget proposal totals about $500 million less than the current year’s budget.
Health care
Lawmakers have bolstered primary care by adding more than $40 million — $15 million in state funding, the rest from federal sources —toward Medicaid rate increases for primary care providers, which lag behind those in surrounding states. They have also added a primary care rate review to be performed by the Office of the Healthcare Insurance Commissioner in 2026. Additionally, the bill maintains a proposed match to qualify for federal funding for a loan forgiveness program for primary care providers working in underserved communities. Legislators are also working on several bills outside the budget to ease pressures on primary care providers.
Legislators have added $38 million over the governor’s proposal for hospitals reimbursement rates and direct support payments, including the restoration of the upper payments limit program that the governor cut in his proposal.
Lawmakers have also added $12 million above the governor’s proposal to increase reimbursement rates for staff at nursing homes as part of its revision to the safe staffing law.
Housing
Legislators have increased support for programs to help Rhode Islanders experiencing homelessness by $4 million over the governor’s proposal for a total of $8.5 million. The increase is funded by a portion of an increased conveyance tax and a portion of the hotel tax on whole home rentals as well as an infusion of general revenues. They have also incorporated a separate legislative proposal to allow the developers proposing to renovate the “Superman” building in downtown Providence into housing and commercial space to access an additional state tax incentive programs, but the budget maintains the current total cap on the program.
The bill institutes a new tax on the value of non-owner-occupied houses above $1 million, dedicating that revenue to future redemptions of the low-income housing tax credit.
Support for cities and towns
The budget includes an increase in the general real estate conveyance tax levied on all sales, distributed the same way it is now including revenue directed to municipalities. It also extends the hotel tax to short-term rentals of whole homes, dividing the new revenue between the municipalities where it is generated, support for homelessness programs, and the hospitality and tourism agencies that get a cut of the rest of the hotel tax. Legislators have also raised the local hotel tax from 1 to 2 percent, further supporting municipalities.
Funding for distressed communities was raised by $2.5 million over the governor’s proposal. The car
tax reimbursement index was restored but capped at 2 percent.
To further help strengthen municipal budgets, lawmakers have fully funded library aid, as well as the funding formula for state aid to education. They added $16.5 million in education aid to the governor’s proposal to cover data updates and some increased allocation through special education categorical funding, for a total of $59 million above the current year’s level for education aid.
Transportation
To help the Rhode Island Public Transit Authority with its budget shortfall, legislators have dedicated a 2-cents-per-gallon increase to the gasoline tax to RIPTA. That move, along with an expanded share of other dedicated transportation funds, is expected to provide about $15 million to RIPTA in the 2026 fiscal year. While the additional funding is less than RIPTA’s initially projected budget shortfall, legislative leaders are pushing the agency to identify efficiencies to make up the rest, and included a stipulation prohibiting RIPTA from cutting the RIde Anywhere program that provides door-to-door transportation for qualified passengers with disabilities.
Lawmakers have expanded the governor’s proposal for a new registration fee for electric vehicles as a proxy for transportation support that drivers of other cars provide through the gasoline tax. The proposal includes a $200 annual registration fee for battery electric vehicles, $100 for plug-in hybrids and $50 for hybrids.
Legislators have also maintained the governor’s assumption that the state’s toll gantries for commercial
trucks, shut down for several years over a lawsuit that the state ultimately won, would be reactivated by the final months of the year to generate $10 million in revenue.
Lawmakers have added a new proposal to apply the state sales and use tax to short-term parking of up to one month starting Jan. 1, to generate $1.6 million during the half of the fiscal year it applies.
Child care
The budget extends a state program that subsidizes care for the children of child care providers. It also
establishes separate rates for infants and toddlers receiving state-subsidized care and increased the infant rate to address the higher costs of those placements.
Initiatives not funded
For the second straight year, lawmakers have removed the governor’s proposal to purchase a large facility owned by Citizens Bank in East Providence to house several state departments. In addition to general uncertainties, legislative leaders cited the announcement of the increased price tag for the replacement of the westbound span of the Washington Bridge. Legislators added $22 million to cover the state share of the project costs from capital funds in 2027.
Legislative leaders faced significant challenges in this budget, including federal uncertainty, the end of emergency federal COVID funding, a sizable budget gap to address, and having to identify solutions to numerous gaps in the governor’s proposal. Accordingly, lawmakers have largely declined to include most new spending programs the governor’s budget proposed.
They did not include the governor’s proposed 10% tax on digital advertising aimed at large online media providers. A similar program has been enacted in Maryland, resulting in litigation and failing to raise revenue for the state.
They also did not include his proposal to raise the cigarette tax by another 50 cents to $5 per pack, although they did close a loophole that has resulted in nicotine pouches to escape the tax on tobacco products.
Legislators did not increase marketing dollars given to Bally’s casinos. Bally’s sought a $17 million increase in the state’s marketing share in exchange for a possible smoking ban in the casinos.
Also not included were the “baby bond” proposal from the governor and general treasurer, the governor’s workforce development program increases and a proposal to merge the minimum and medium security units at the Adult Correctional Facilities that was found not to achieve the intended savings.
Lawmakers also did not incorporate a proposal to institute a “millionaire’s tax” on high earners, although given uncertainty at the federal level including major tax code changes, it remains an option should the state’s circumstances change later in the year.
For more information, contact:
Greg Pare, Director of Communications for the Senate
State House Room 112
Providence, RI 02903
(401) 276-5558
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