McKee signs $15.2B FY27 budget to great fanfare from lawmakers and advocates

In a drab government conference room a year ago, Gov. Dan McKee blasted lawmakers for unnecessary taxes and fees as he explained to reporters why he refused to sign the state budget.

On Friday, colorful blocks and signs adorned the Providence childcare center where McKee gave his John Hancock to the fiscal 2027 budget, with advocates, lawmakers and smiling toddlers looking on. The ceremonial signing at Children’s Friend marks the end to the six-month legislative session, in which executive and legislative branches work to craft and shape an annual tax-and-spend plan.

The $15.2 billion budget, which takes effect July 1, doesn’t include everything on McKee’s wish list. But he praised lawmakers for keeping him in the loop during their revision process — which he said didn’t happen last year. More importantly, the governor said, the spending plan preserved his focus on affordability.

“You can see by the excitement in this room, whether its the child tax credit I put on the table, whether it has to do with the Social Security tax, the Hope Scholarship is something that was very important to me, that was in there,” McKee said, speaking to reporters after the budget signing. “We are not backing away from our goals.”

He acknowledged that he would have gone further on eliminating income taxes on Social Security benefits — legislators agreed to cut the minimum age requirement for retirees to bypass taxes but declined to take up McKee’s recommendation to phase out the tax entirely. Similarly, McKee’s $1 billion energy affordability plan was stripped of its central elements in favor of preserving climate change and energy efficiency programs. 

“I’ve put everyone on notice that I’m not done,” McKee said.

His pledge to put tax relief for retirees and energy bills at the top of his priority list next year omitted the fact that his future in the executive office hinges on winning a tough reelection bid against Democratic primary challenger Helena Buonanno Foulkes.

But the embattled incumbent used the budget signing as a de facto campaign speech, touting his office’s accomplishments on job creation, educational investments and support for working families. The fiscal 2027 budget features the state’s first permanent, refundable tax credit for low to middle-income families with children. The $47 million state program is projected to help 70,000 families, receiving an average of $330 per child per year.

“That’s a big deal,” McKee proclaimed.

The budget also includes a phased-in millionaire’s tax, a new inspector general’s office, and a historic $600 million bond package with proposed investments in higher education, housing and a state history center. 

House Speaker Christopher Blazejewski and Senate President Valarie Lawson underscored McKee’s optimistic tone and emphasis on accomplishments, presenting a united front and crediting each other for a spirit of collaboration and inclusion.

The tail end of the 2025 session was marked by tension between the two branches of government, with House Speaker emeritus K. Joseph Shekarchi criticizing McKee’s administration for accounting errors that led to last-minute gaps, and McKee firing back at lawmakers for raising taxes on gas and health insurance.

McKee’s attempt to roll back last year’s 2-cent gas tax hike did not prevail in the final fiscal 2027 budget. But the $4 per person monthly health insurance fee that drew McKee’s ire last year will be short-lived. Legislators agreed with the budget office’s recommendation to repeal the health premium tax starting Oct. 1 due to concerns that it conflicts with federal mandates under H.R.1.

“By law, we probably needed to do it, but it was certainly a priority of mine,” McKee said Friday.

The fee was meant to fund a state assessment on healthcare needs. Even in its absence, the fiscal 2027 budget makes strides toward helping healthcare providers and patients afford and access care, including $39 million for hospitals to offset a rise in uncompensated care, $22 million for enrollees in the state health exchange, and $5 million to begin the process of establishing a state medical school at the University of Rhode Island. There is also $116 million to increase Medicaid reimbursement rates for home healthcare providers, as recommended by the Office of the Health Insurance Commissioner.

“Medicaid rates are so important, especially with the cuts coming out of Washington,” Blazejewski said.

Lawson highlighted the $3 million for the Rhode Island Community Food Bank among measures to address food insecurity, also expected to worsen under federal changes to the Supplemental Nutrition Assistance Program. 

“This budget represents what we believe is our strong commitment for working people in Rhode Island,” she said. 

What about the charter schools?

Not mentioned during the 30-minute event, but looming in the minds of educators and parents of school-aged children: the fate of a controversial three-year ban on new charter schools given final approval by the Rhode Island General Assembly less than 24 hours earlier. The teachers’ union-backed measure was lauded by proponents, including Lawson, as a way to prevent resources from being drained from traditional public schools, at least until policy experts can determine a better way to reform state aid to school districts. But opponents said a moratorium hurts families, including the 600 unable to send their children to a K-12 dual language charter school that already received preliminary approval, but is now on hold because it didn’t get the final OK.

Chiara Deltito-Sharrott, executive director for the Rhode Island League of Charter Public Schools, sent out an email blast midday Friday, urging recipients to call McKee’s office and tell him to veto the bill. 

“The fight is not over,” she wrote in the email. “We can still stop this harmful bill from becoming law.”

McKee, a longtime charter school proponent, softened his stance in recent weeks, agreeing to the merits of a moratorium. But he remained concerned about the legislation’s provision to reduce the statewide cap on charter schools from 35 to 28.

He remained noncommittal Friday.

“That is still a decision I’m going to make,” he said, though he noted the bill has a veto-proof majority in the General Assembly.

He did not name any other bills he intends to veto when asked by reporters.