Governor Dan McKee submitted his FY 2026 budget to the Rhode Island General Assembly, emphasizing investments in education and workforce development without raising broad-based taxes. The budget proposal aims to close a $250 million deficit while maintaining key programs and initiatives.
“This budget is about protecting the progress Rhode Island has made over the last four years while positioning our state to pursue all the promise that lies ahead,” McKee said.
The governor’s plan increases K-12 education aid by $43.4 million, raising per-pupil funding to $13,322 – a $705 increase from the FY 2025 level.
McKee’s budget allocates $2.5 million for Learn365RI municipal grants to support high-quality, out-of-school-time programming. This complements a $5 million investment in the FY 2025 budget.
The proposal introduces “Ready to Build,” a pre-apprenticeship pathway to the building trades at the Community College of Rhode Island, with an $800,000 investment in general revenue.
A Culinary Hospitality Hub at CCRI’s Newport Campus is also in the works, aimed at training the next generation of culinary and hospitality workers.
The budget invests $6 million to create 1,000 new work-based learning opportunities for youth through programs like Real Skills for Youth and the PrepareRI High School Internship.
An additional $2.9 million is allocated for dual and concurrent enrollment programs, supported by resources from the Rhode Island Student Loan Authority. This aims to meet demand and allow high school students to take postsecondary courses.
The state’s public higher education institutions – the University of Rhode Island, Rhode Island College, and CCRI – will receive a 4 percent increase totaling $10.6 million. Of this, $1.7 million supports career readiness, placement, and internship services.
McKee’s budget also addresses infrastructure needs, investing an additional $6.5 million in RhodeRestore, the governor’s signature program for transportation infrastructure projects. The proposal includes a mechanism to make it easier for municipalities to access this funding through the Rhode Island Infrastructure Bank.
To maintain transportation infrastructure funding as gas tax revenue declines, the budget introduces new two-year registration fees for electric vehicles ($300) and plug-in hybrid vehicles ($150).
The governor’s plan tackles health and wellness issues, proposing an assault weapon ban and a sales tax exemption for gun safety goods like lock boxes and safes.
It recommends that primary care provider rates be reviewed by the Office of the Health Insurance Commissioner in September 2027, aiming to create a competitive primary care job market in Rhode Island.
The budget invests $200,000 in general revenue, matched by $200,000 in other funds, for the Health Professional Loan Repayment Program. This offers loan repayment assistance for primary care providers and pediatricians who commit to practicing in Rhode Island’s federally designated health professional shortage areas for two years.
Funding for senior support services increases from $1.4 million to $1.6 million, representing progress toward the governor’s goal of providing $10 per senior in support services.
The proposal includes measures to create government efficiencies, such as purchasing a large commercial building in East Providence to co-locate multiple state agencies and achieve long-term savings.
It also recommends closing the Minimum Security Facility and creating a new unit within the Medium Security Facility, offering more programming and job opportunities.
To address homelessness, the budget allocates $15.7 million from multiple funding sources, including two new sustainable funding streams. It proposes applying the 5 percent hotel tax to whole-home short-term rentals and increasing the real estate conveyance tax for properties above $800,000 from 0.92 percent to 1.25 percent.
McKee’s budget submission represents his fifth consecutive proposal without broad-based tax increases, focusing on strategic investments and efficiencies to address the state’s fiscal challenges while supporting key priorities in education, workforce development, and infrastructure.
View Governor McKee’s full budget submission here.
Reaction
The Hospital Association of Rhode Island (HARI) and The Rhode Island League of Cities and Towns have provided the following reactions to the proposed budget;
HARI
R.I. Hospital Association: Governor’s Budget Will Worsen Health Care Crisis
The Hospital Association of Rhode Island voiced concerns today in response to Governor McKee’s proposed FY26 state budget, which includes over $25 million in cuts to hospital funding. These cuts come as the state’s health care system already faces an accelerating crisis that threatens access to care for Rhode Islanders and the sustainability of health care facilities statewide.
“The Governor’s budget proposal will only make a bad health care situation worse for Rhode Islanders,” said Howard Dulude, Interim President of the Hospital Association of Rhode Island. “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,” Dulude said.
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,” said Dulude. “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.”
Rhode Island League of Cities and Towns
Governor’s Budget Invests in 39 Cities and Towns
Strengthening Rhode Island Together
The Rhode Island League of Cities and Town (the League) released today their analysis of the Governor’s FY 2026 budget. The League found that the Governor invested in several of the League’s priorities, including local aid, education, and municipal roads and bridges.“Governor McKee recognizes that Rhode Island is stronger when its 39 cities and towns are supported,” said East Providence Mayor Bob DaSilva, President of the League. “Despite a challenging budget, we appreciate the Governor prioritizing investments in the critical areas of education, local infrastructure and seniors which will allow communities to protect taxpayers financially and strengthen job growth.”
Earlier this month, the League shared its legislative priorities with the Governor and members of the General Assembly, including:
- Education funding reforms, which include improving budget certainty and increasing the state share of teacher pensions;
- Funding for transportation, infrastructure and resiliency programs, including the successful Municipal Infrastructure Grant Program and Municipal Road Program;
- State-mandated tax emption reform, which includes state reimbursement for property tax exemptions or structuring exemptions as enabling legislation; and
- Workforce management reforms, including parity with state pensions for municipal disability pensions and municipal injured-on-duty benefits and common-sense safeguards that limit the scope of binding arbitration.
“Municipal leaders and their taxpayers appreciate the Governor’s efforts to balance the budget with minimal affect on cities and towns,” said Randy Rossi, Executive Director of the League. “We are hopeful that when revised revenues are issued this spring, further investment in education aid and local communities can be made. Our members and staff look forward to working collaboratively with the General Assembly this session.”
The Governor’s budget also supports unhoused members of our communities, which will assist municipalities efforts. Additionally, the Governor’s investments in senior centers are a critical connection for our older residents.