Millionaire’s Tax, Line Item Veto, $600M in Bond Questions - McKee’s $14.8B FY27 Budget Proposal
GoLocalProv News Team
Millionaire’s Tax, Line Item Veto, $600M in Bond Questions - McKee’s $14.8B FY27 Budget Proposal
On Thursday, Governor Dan McKee unveiled his $14.8.5 billion Fiscal Year (FY) 2027 budget proposal, an increase of $522 million over the enacted Rhode Island FY26 budget of $14.3 billion.
The McKee administration pointed to the impact of the Trump Administration's "Big Beautiful Bill" (H.R. 1) for increasing states' share of SNAP administrative costs - and now requiring states to contribute to benefit payments.
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In addition, "Keeping Rhode Islanders insured through HealthSource" is budgeted at $9.5 million, as the state projects that 13,000 Rhode Islanders could lose their coverage under the expiration of the Enhanced Affordable Care Act.
The budget proposal, which now goes to the Rhode Island House of Representatives, reflects an OMB forecast of a FY27 deficit of $101.3 million.
On Thursday, the McKee administration said that H.R. 1 "forced [the Governor’s] hand” to propose implementing a “Millionaire’s Tax” similar to Massachusetts’.
The budget unveiled proposes creating a fourth tax bracket at 8.99% for income over $1 million in FY27; the new bracket is projected to “generate $67.1M in FY27 and $135.5M in FY28.”
"$1 Billion in Ratepayer Relief" - Relaxing of Climate Goals
McKee, who is running for reelection in 2026 budget claims “$1 billion of relief to ratepayers over the next five years”
And while the McKee administration is proposing lofty projections for increased savings to reach billions, the administration cites the projected savings per customer, on an annual basis to be $180 - which translates to $15 a month.
Citing “reforming the ‘Renewable Energy Standard,’ reducing net metering costs, and renewing and capping ‘Energy Efficiency Program,’” among other proposals, the McKee administration says that the projected FY2027 ratepayer savings of $151 million will increase to over $1 billion in “ratepayer savings” by Fiscal Year 2031.
It would come at the expense of climate goals previously championed by McKee.
On Thursday, Acting RI Energy Commissioner Chris Kearns with said the budget proposal is about "balancing energy affordability to ratepayers with our climate objectives."''
"We are committed to our decarbonizing goal but we have to balance energy affordability as part of that landscape," said Kearns.
In 2022, McKee touted signing what he said was "historic legislation requiring 100% of Rhode Island’s electricity to be offset by renewable energy by 2033."
That, however, would not happen under his new proposal.
"So the legislation 100% by 2033 - the proposal now would have to be 100% by 2050, still in line with our Act on Climate ultimately net zero emissision reductions by 2050 but it would reduce the renewable energy standard obligation - I believe it's 41, 42% in the current year - it would reduce it to 35% next year and escalate it over a longer time," said Kearns.
Budget Items in Focus
The Governor’s budget proposal includes $600 million in bond questions on the November 2026 ballot.
The questions proposed include Higher Education Facilities ($215 million); Housing and Home Ownership ($120 million); Economic Development ($115 million); Cultural Economy ($50 million); Career and Technical Education Grants ($50 million); and Green Economy and Green Energy ($50 million).
McKee is also proposing to spend $3 million to partially reopen the Foxtrot Neighborhood veterans home with 16 additional beds and 24 FTE positions.
The budget includes language that would put before voters a line item veto constitutional amendment - this allows the Governor to strike specific provisions or changes that the legislature passes in the budget.
The McKee Administration cited that there are 44 states where Governors have line item vetos "as a way to control costs" - and "just like a regular veto, the General Assembly can override that veto by a 3/5 vote."