Rhode Island

Gov. McKee Announces Tax Relief Plan. Here's What It Means for Rhode Islanders

Among his proposals is to reduce the state sales tax from 7% to 6.85% and freeze the gas tax, which is scheduled to increase in July

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Rhode Island’s governor said in his State of the State address Tuesday that he will propose broad tax relief in his forthcoming budget plan.

Democratic Gov. Dan McKee laid out his administration’s legislative plans and budget priorities in the address to the General Assembly — his second State of the State address.

McKee said in his prepared remarks the budget he will submit to the General Assembly this week will propose a broad tax relief plan to help Rhode Island residents navigate inflationary pressures and make the state a more competitive place to do business. McKee wants to reduce the state sales tax from 7% to 6.85%, which equates to about $35 million annually in taxes.

State law requires a 3-cent increase in the gas tax starting July 1, for $25 million annually in taxes. McKee is proposing to stop the increase. He also wants to give residents a rebate for the gross receipts tax on energy bills this winter, reduce the corporate minimum tax and eliminate a tax that businesses pay for litter. McKee said the litter tax is a nuisance for small businesses and does not pay for cleaning up litter, so the state should fund an initiative to tackle litter instead.

McKee was sworn in for his first full term as Rhode Island’s governor this month, saying he has never believed more strongly in the state’s future. He is a former lieutenant governor who became the state’s chief executive in March 2021 when two-term Gov. Gina Raimondo was tapped as U.S. commerce secretary.

McKee is required to submit to lawmakers a proposed budget for the fiscal year that starts July 1. McKee said his goals are to strengthen the education system, raise incomes in every community and create a healthier state. Within the first 100 days of his full term, he aims to outline a plan for Rhode Island students to do as well as, or better than, Massachusetts students on standardized tests by 2030. The budget will invest an additional $57 million in K-12 education and another $4 million for out-of-school learning programs.

McKee wants to make Rhode Island a hub for bioscience activity, a priority he shares with Democratic House Speaker Joseph Shekarchi.

He said in his prepared remarks that he is proposing a new matching grant program to help municipalities fix potholes. He wants to update the formula that allocates how state funding goes to schools, and he wants to build the new Department of Housing into a robust state agency with additional funding to help homeless people.

In addition to members of the General Assembly, the state’s other general officers, members of the judiciary, heads of various state departments and agencies and municipal officials typically attend the governor’s State of the State address.

Copyright AP - Associated Press
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