Governor Dan McKee submitted his $14.2 billion budget for fiscal year 2026 on Jan. 16, marking a $250 million increase from the FY 2025 budget of $13.9 billion. The proposed increase follows a projected budget deficit of $297.8 million in the upcoming fiscal year, according to an analysis by the Rhode Island Public Expenditure Council.
McKee said that his budget would close the deficit to $223.3 million. The budget projects an increase in state expenditures by 3.7% annually while revenues are only expected to grow by 2.5%.
“To address this projected deficit, we must make tough decisions to streamline operations, eliminate redundancy and ensure every dollar is used efficiently,” McKee wrote in the budget’s executive summary.
Overall, the proposed budget aims to bolster Rhode Island’s educational programs and workforce, upgrade the state’s infrastructure, generate revenue to address homelessness, fund select health services and consolidate various agencies.
One of the main expenditures are investments in the state’s education system. The proposed budget includes allocations of $43.4 million for K-12 education, $6 million for the creation of 1,000 new “work-based learning opportunities” and $2.5 million for Learn365RI municipal grants to create more extracurricular opportunities for students.
The budget also includes a total investment of $400,000 for the Health Professional Loan Repayment Program, which assists with loan repayments for primary care physicians and pediatricians in Rhode Island committed to practicing in federally designated health professional shortage areas.
The proposed budget’s spending cuts have sparked criticism from various groups.
The Hospital Association of Rhode Island in particular called out McKee’s budget for its “substantial cuts and tax increases targeting hospitals,” condemning the $25 million cut in funding for hospitals and slowed Medicaid increases for nursing homes and hospitals.
Public transit advocates have also expressed disappointment in the proposed budget, which leaves Rhode Island Public Transit Authority with an approximate $32 million budget shortfall.
“If the state does not find a way to close RIPTA’s budget deficit, those who use transit can expect massive service cuts,” wrote Patricia Raub, the co-coordinator of activist organization Rhode Island Transit Riders, in an email to The Herald. “The state has an obligation to provide its bus-riding residents with the service they need.”
McKee’s office did not respond to a request for comment.
Despite these spending cuts, the state’s budget deficit persists.
The analysis released by the RIPEC said using one-time sources of revenue for expenditures that the state must routinely pay was the main driver of Rhode Island’s deficit.
In order to address the budget deficit, RIPEC also recommended better management of health and human services funds, restructuring school funding to focus on sustainability and equity and monitoring personnel expenditures, among other action items.
Michael DiBiase, the CEO of RIPEC, called the state’s projected funding gap “very problematic” in a press release sent to The Herald accompanying RIPEC’s analysis.
“If you look through (McKee’s) proposal, there’s a $300 million deficit for fiscal year 2027, so he’s not addressed the structural issue,” DiBiase said in an interview with The Herald.
Although he acknowledged the cuts in Medicaid increases and mentioned that RIPEC hasn’t yet analyzed the new budget, DiBiase stated that Medicaid spending “continues to be an issue.”
“Health and Human Services and Medicaid is growing faster than the revenues,” DiBiase added.
But he also acknowledged the merits of McKee’s outlined budget.
“I think there’s a lot of positive things in the governor’s budget,” DiBiase said. “He approached the budget as a spending problem more than a revenue problem.”
