State spending in Rhode Island continues to rise at an unsustainable rate amid slowing revenues and uncertainty about federal funding, a business-backed fiscal watchdog group warned in a report released Wednesday.
The Rhode Island Public Expenditure Council found that state general revenue spending climbed by 10.9% over the last two fiscal years, while state general revenue increased during that period by 6.4%.
At the same time, the current $14.3 billion state budget is the highest in state history and a 3.8% jump over the previous year.
RIPEC noted that a handful of tax and fee increases contributed to the higher spending, including a health insurance premium assessment, a gas tax increase, a hike in the real estate conveyance tax, and new fees on hybrid and electric vehicles.
Also boosting the highest spending: $230.2 million in one-time surplus funds.
“The FY 2026 budget represents the first time in many years in which the General Assembly has turned to substantial increases in taxes and fees to support higher spending,” Michael DiBiase, president and CEO of RIPEC, said in a statement accompanying the group’s report.
“This rate of spending, which exceeds the projected growth of revenues and inflation, is not sustainable,” DiBiase added, “and raises questions as to whether expanded spending is delivering better value and outcomes for taxpayers and their families.”
RIPEC found that the top drivers of increased state spending are K-12 education and health and human services, particularly Medicaid.
In a joint statement, Senate President Val Lawson and House Speaker Joe Shekarchi offered an initial response to the RIPEC report.
“The balanced budgets we have enacted in the legislature made important investments in Medicaid that 300,000 Rhode Islanders, including seniors, children and working families, depend on for vital health care,” the legislative leaders said.
They added: “We feel it is imperative to address the health care crisis our state is experiencing by enhancing reimbursements for primary care, hospital patients and long-term care. We have a responsibility as elected leaders to invest in health care, education and housing for Rhode Islanders, especially as Republicans in Congress cut federal support for Medicaid and other programs to states.”
Rhode Island faces a projected budget deficit of $304.3 million for fiscal 2027, a reminder that the state has moved well past the uncharacteristic budget surpluses of the COVID years.
To address the mismatch between costs and revenue, RIPEC recommends curbing the growth of spending, avoiding tax increases, controlling healthcare and human service costs, pursuing reform of school funding, and raising the focus on more transparent and accountable evaluations of the effectiveness of state spending.
