PROVIDENCE, R.I. — Gov. Dan McKee on Thursday rolled out his proposed fiscal year 2027 budget, pitching it as an “Affordability for All” plan aimed at easing the rising cost of living, protecting vulnerable Rhode Islanders from federal safety-net cuts under President Donald Trump, and continuing major investments to support jobs and economic growth.
“My commitments to Rhode Islanders are clear: putting more money back in families’ pockets, protecting the most vulnerable, and keeping Rhode Island building,” McKee said as he unveiled the proposal.
A central piece of the budget focuses on tax relief and household affordability. The plan would phase out Rhode Island’s tax on Social Security benefits over the next three years, making the state one of fewer nationwide to tax those benefits. In the first year alone, about 9,200 early retirees would be fully exempt. The budget also creates Rhode Island’s first child tax credit by converting the current dependent deduction into a fully refundable credit worth $325 per child, delivering an estimated $30 million in annual relief, primarily to lower-income families.
To address utility costs, the proposal calls for more than $151 million in electric ratepayer relief in 2027 and more than $1 billion in savings over five years by reforming state-driven charges on electric bills. It also repeals a recently enacted 2-cent motor fuel tax increase.
Health care affordability is another major focus. The budget would backfill recently expired enhanced Affordable Care Act subsidies to help about 20,000 residents maintain coverage, invest in curbing health care cost growth, increase drug-price transparency, and authorize enforceable annual cost-growth targets for insurers.
McKee also proposed a historic $600 million general obligation bond package, branded as “Keep Rhode Island Building,” to appear on the November ballot. The bonds would fund capital projects across higher education, affordable housing and homeownership, economic development, clean energy and climate resiliency, career and technical education, and cultural and historic preservation. Major projects include new facilities at the University of Rhode Island and Community College of Rhode Island, housing investments statewide, and the state’s largest-ever climate resiliency commitment.
In response to federal actions tied to H.R. 1, the budget invests $19.3 million to help protect access to Medicaid and SNAP benefits, provides $10 million to hospitals to offset uncompensated care, increases funding for social and human service providers, doubles funding for the Rhode Island Community Food Bank, and supports access to reproductive health services. It also begins reopening additional capacity at the Rhode Island Veterans Home.
Education funding would rise across the board, including a 3.1% increase in per-pupil aid, additional special education funding, expanded support for Learn365RI, a 2.5% increase in operating aid for public colleges, and making the Hope Scholarship permanent.
Revenue proposals include creating a new 8.99% tax tier on income over $1 million, launching a tax amnesty program, and decoupling from a federal research and development tax change.
McKee said the budget reflects the concerns he hears from families facing higher costs, economic uncertainty, and shrinking safety nets. “I submit my budget proposal for those families — for all families,” he said.
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