Governor McKee Signs Historic FY 2023 State Budget to Maintain Rhode Island’s Economic Momentum

Published on Monday, June 27, 2022

Record Investments in Housing, Economy, Child Care; Tax Relief for Families, Veterans, Local Businesses

PROVIDENCE, RI – Governor Dan McKee today signed the FY 2023 State budget, making crucial investments to maintain Rhode Island’s economic momentum. The budget makes historic investments to address the housing crisis and strengthen Rhode Island’s economy while providing targeted tax relief to families, veterans and local businesses.

The Governor was joined for the signing by Lt. Governor Sabina Matos, House Speaker K. Joseph Shekarchi, Senate President Dominick J. Ruggerio, House Finance Committee Chairman Marvin L. Abney and Senate Finance Committee Chairman Ryan W. Pearson.

“Rhode Island has the momentum – we have the lowest unemployment rate in over 30 years and our economic recovery is ranked second in the nation by Moody’s. This budget gives us the tools to ensure our momentum continues,” said Governor McKee. “I am proud to sign a budget that includes our historic investment to finally address the housing crisis while delivering much-needed tax relief for families and local businesses without a single tax increase. This budget represents a true collaborative effort that will help Rhode Island embrace the once-in-a-generation opportunity before us. I thank the Speaker and Senate President for their partnership in delivering real results for hardworking Rhode Islanders though this budget.”

“This year’s budget makes meaningful investments that will strengthen our economic rebound while investing in critical areas that have long gone neglected,” said Lt. Governor Sabina Matos. “The historic $250 million housing investment, the expansion of Medicaid coverage for all children and women postpartum through 12 months, and the elimination of taxes on military pensions are items I’m proud I strongly advocated for. I applaud Governor McKee, the Speaker, and Senate President for finalizing a budget that will benefit all Rhode Islanders.”

“Rhode Island has been making a very strong economic comeback since the worst days of the pandemic, and with a boost from the federal resources we’ve received over the last couple of years, we’re going to be able to help Rhode Islanders from all walks of life through this budget. A budget is really much more than hundreds of pages of revenue and expenditures; it’s how we act on our priorities and values. With this budget, we’re saying we hear Rhode Islanders when they say they can’t find housing they can afford and they are feeling the pinch of inflation. We know that for a healthy, strong community, we need more funding for health care, mental health and social services. We understand that good education is the key to a strong future, and that kids need safe, healthy places to learn. I’m proud of what we’re able to do today with our resources, and I especially want to thank the House Finance Committee, led by Chairman Marvin Abney, for the months of work they put into crafting this plan, along with our colleagues in the Senate and Governor McKee for working in partnership with us on the ideas included in it. This is a responsible budget that will have positive impacts for all Rhode Islanders,” said House Speaker K. Joseph Shekarchi (D-Dist. 23, Warwick).

“This budget is the product of months of collaboration, and I’m proud that it includes many of the Senate’s top priorities. It provides immediate relief for Rhode Islanders who are coping with the burden of inflation, and it makes significant long-term investments in our state’s future,” said Senate President Dominick J. Ruggerio (D-Dist. 4, North Providence, Providence). “We have eliminated the car tax a year ahead of schedule, and the vast majority of Rhode Islanders will never receive another car tax bill. And we have wisely used our one-time revenue windfall, both federal dollars and state surplus, to make one-time investments that will pay off for decades.”

Said House Finance Committee Chairman Marvin L. Abney (D-Dist. 73, Newport, Middletown), “This budget is a product of true collaboration between the House, the Senate and the Administration which will continue to drive Rhode Island’s recovery and assist the taxpayers and residents with the challenges we still currently face. It was designed to help the good of the whole with a responsible focus on protecting the taxpayers from possible future deficits while also supporting the vital services our residents rely upon and need. I commend all who had a hand in this important piece of legislation and I look forward to seeing the investments made within the budget benefit all Rhode Islanders into the future.”

“Our priorities have been to ensure a budget that takes care of Rhode Islanders today and into the future. The immediate benefits of this budget include targeted economic relief like the child tax credit, the early elimination of the automobile excise tax, property tax relief for seniors and the disabled, income tax breaks for veterans and retirees. In the long term, we are setting the stage for a robust blue economy in our state, changing the trajectory for health care through reimbursement rates that will better sustain our workforce and rebalancing the health care system, and investing in our school infrastructure, higher education facilities and our information technology capital. This is a budget that responsibly sustains our state and points us toward a vibrant future,” said Senate Finance Committee Chairman Ryan W. Pearson (D-Dist. 19, Cumberland, Lincoln).

Highlights of the FY 23 budget include:

Historic Investment in Housing

Rhode Island is making a once-in-a-generation, quarter of a billion dollar investment in housing at all levels – a pledge that Governor McKee made during his first State of the State address. This commitment represents the largest investment of American Rescue Plan funds in the state’s budget. This bold investment also includes $29.5 million that the Governor immediately directed toward housing in his Rhode Island Rebounds economic down payment passed by the General Assembly in January.

The budget, combined with the Rhode Island Rebounds investments, allocates $100 million for the development of affordable housing; $30 million for down payment assistance to help home buyers struggling with rising prices; $25 million for community revitalization $20 million to assist individuals and families experiencing homelessness or housing instability; $21.5 million to create more workforce housing; $25 million for the acquisition of properties to be redeveloped into affordable and supportive housing; $15 million to increase shelter capacity and $3.5 million to create a statewide housing plan and increase capacity at the Office of Housing and Community Development.

Bolstering the Blue Economy and Combating Climate Change

Rhode Island is primed to be a leader in the Blue Economy and at the forefront of addressing the climate crisis. The budget reflects the Governor’s commitment to shoring up that lead and creating good-paying jobs for Rhode Islanders in the process.

It includes a $70 million investment to strengthen our Blue Economy, $30 million in bioscience investments, $60 million to improve infrastructure at the Port of Davisville and $35 million to build a game-changing wind turbine staging area at the South Quay Marine Terminal.

The budget invests $25 million to create an Electric Heat Pump Incentive Program and $23 million to expand Rhode Island’s network of electric vehicle charging stations.

The budget also includes Governor McKee’s Green Bond proposal. The bond would direct $16 million to the Municipal Resilience Program to help communities restore and improve vulnerable coastal habitats, river and stream floodplains, and infrastructure. It also includes $5 million for a small business energy loan program to provide zero-interest and below-market loans for clean energy projects.

Supporting Children and Families

Investing in child care is not only an investment in families and our economy today, but for generations to come. The budget makes bold investments that position Rhode Island to be the best place to raise a family and find real economic opportunity. Rhode Island is currently ranked as the third-best state in the nation for working moms – this budget positions the state to continue to make progress.

The budget raises the Child Care Assistance Program (CCAP) rates to support families using the program to access high quality care and expands income eligibility for the first time in more than two decades. In addition, this budget makes historic investments in early educators with an additional $18.7 million for continuing the pandemic educator retention bonus program and $2 million for higher education access for early educators. The budget also calls for a plan to reach 5,000 pre-kindergarten seats over the next five years.

This budget also covers all income-eligible kids in Medicaid and extends postpartum Medicaid coverage for new moms from 60 days to 12 months, regardless of immigration status. It makes vital investments in children’s healthcare and developmental supports, including stabilization funding and rate increases for pediatric primary care providers and Early Intervention providers.

In addition, the budget invests $20 million in the nonprofit sector through the RI Foundation to combat food insecurity and directly funds assistance to survivors of domestic violence.

Delivering Targeted Tax Relief to Families, Veterans & Local Businesses

The budget delivers a targeted tax cut plan to provide relief to families, veterans and local businesses. The tax cut plan includes the Governor’s proposal to offer child tax rebates of $250 per child, up to three children, for Rhode Island residents making up to $100,000 for an individual and $200,000 for joint filers. This plan would support nearly 110,000 Rhode Island families.

In addition, the budget accelerates the car tax phase-out, ending it a year early in Fiscal Year 2023. This will speed up relief to many Rhode Islanders, impacting over 490,000 vehicles that are still being taxed. The State will also eliminate the $8 license plate fee for the upcoming license plate reissuance. The budget will also end the tax on military retirement benefits, increase the existing tax exemption on retirement income from the first $15,000 to the first $20,000, expand the state’s property tax circuit breaker program for elderly and disabled residents and reduce Unemployment Insurance taxes for local businesses by an estimated $10 million.

Supporting Small Businesses

Small businesses continue to be a key driver of Rhode Island’s economic rebound.  In addition to Unemployment Insurance tax relief for businesses, the budget reduces the interest rate on certain delinquent tax payments from 18 percent to 12 percent and reforms tangible taxes. It also creates a designated Taxpayer Steward within the Rhode Island Division of Taxation to guide small businesses and individuals through the taxation process.

The budget finally allows Rhode Islanders to sell baked goods made in their home kitchens. Until now, Rhode Island was the only state in the country that restricts cottage food licenses to farmers. The budget also directs $6 million to create the Governor’s Minority Business Accelerator which will bolster the minority business community and help increase minority business ownership in the state.

Investing in Our Workforce & Education Infrastructure

To ensure Rhode Island’s economic momentum is maintained, the budget makes strategic investments in the state’s workforce and education infrastructure. The budget calls for a $300 million investment in K-12 school construction to help ensure all students have state of the art facilities. It also includes an additional $67 million to ensure school districts do not experience funding cuts due to pandemic-related K-12 enrollment declines.

The budget includes the Governor’s $46.7 million matching fund to enable cities and towns to renovate or build a wellness center to strengthen workforce development, education, and health in their community.

The budget makes much-needed investments in higher education: $132 million for the University of Rhode Island’s Narragansett Bay Campus; 35 million for the Rhode Island College Student Services Center; and $12 million for the Community College of Rhode Island to modernize classrooms, labs and student support spaces.

The budget also expands the Wavemaker Fellowship loan forgiveness program to include health care and mental health care professionals, creates Enhanced Real Jobs to reduce barriers to employment, and invests millions of dollars to increase wages for the health care and behavioral health workforce.