H 7251Public Finance

Public Finance - State Budget

This bill limits annual state budget growth to the higher of the inflation rate or the personal income growth rate.

Held for study

Population
Affected

Introduced Jan 21, 2026Committee House Finance

Plain-English Summary

This legislation establishes a limit on how much the state government can increase its spending from one year to the next. Specifically, the total state budget cannot grow by more than the rate of inflation or the rate of growth in Rhode Island residents' personal income, whichever number is higher. There are exceptions to this rule for debt payments, mandatory federal fund spending, and declared emergencies. If the state spends more than allowed, the Governor must produce a plan to reduce spending in the following year to get back within the limits.

For younger readers

Imagine you get an allowance every week. This law is like a rule for the government's allowance. It says the amount of money the government spends can only grow a tiny bit each year. It can only go up as much as prices in stores go up, or as much as people's paychecks go up. This is to make sure the government doesn't spend too much money too fast. If there is a big emergency, like a bad storm, they are allowed to break the rule to help people.

Who & Where It Applies

Impacted groups

TaxpayersState Government AgenciesRecipients of Public AssistanceState EmployeesGeneral Assembly

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Ensures that state spending limits are tied to personal income growth, meaning that if the working class is earning more, the government is permitted to expand services proportionately.
Includes a specific exception for federal funds, ensuring that the state can accept and utilize federal grants for social programs, healthcare, and infrastructure without hitting the state spending cap.
Provides a mechanism for emergency expenditures, ensuring that the government retains the ability to mobilize resources for disaster relief or urgent public welfare crises.
Imposes arbitrary austerity measures that could prevent the state from investing in necessary new social programs, education, or infrastructure even if the state has the revenue to afford them.
Could lead to the degradation of public services over time, as the cost of providing healthcare and services often rises faster than the standard Consumer Price Index (CPI) or personal income growth.
Severely limits the government's ability to use the budget as a tool for systemic reform or wealth redistribution to address inequality.

For Conservatives

Enacts fiscal discipline by legally restricting the growth of government, preventing the state budget from ballooning beyond the economic reality of its citizens.
Protects taxpayers by ensuring that government spending—and the taxes required to fund it—cannot grow faster than the economy or inflation.
Forces state agencies to prioritize efficiency and eliminate waste rather than relying on constant budget increases to solve problems.
Allows spending to increase by the "greater of" inflation or income growth, rather than the "lesser of," which still allows for maximum possible government expansion within the framework.
Contains a loophole allowing the General Assembly to create "any other exceptions" by law, which could be abused to bypass the spending cap entirely.
Lacks strong enforcement mechanisms, requiring only a "plan" from the Governor to reduce future expenditures rather than immediate cuts or automatic sequesters if limits are breached.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 28 additions

SECTION 1. Chapter 35-3 of the General Laws entitled "State Budget" is hereby amended by adding thereto the following section: 35-3-28. State spending growth limit.

(a) Definitions. For purposes of this section:

(1) "State spending" means the total amount of appropriations authorized by the general assembly from all sources of revenue in the annual state budget.

(2) "Inflation rate" means the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) for the most recent calendar year, as published by the U.S. Bureau of Labor Statistics.

(3) "Personal income growth rate" means the percentage change in Rhode Island personal income for the most recent calendar year, as published by the U.S. Bureau of Economic Analysis or other reliable source designated by the director of administration.

(b) Spending growth limit. The total state spending authorized by the general assembly for any fiscal year shall not exceed the total state spending authorized for the previous fiscal year increased by the greater of:

(1) The inflation rate for the most recent calendar year; or

(2) The personal income growth rate for the most recent calendar year.

(1) Expenditures for debt service payments or retirement of principal on bonds;

(2) Federal funds received by the state and required to be spent under federal law;

(3) Emergency expenditures declared by the governor and approved by a two-thirds (2/3) vote of the general assembly; and

(4) Any other exceptions as the general assembly may prescribe by law.

(d) Reporting. The director of administration shall annually publish a report comparing actual state spending growth with the limits set forth in this section and submit it to the governor and the general assembly.

(e) Enforcement. If the general assembly authorizes spending that exceeds the limits in subsection (b) of this section, the governor shall provide a plan to reduce expenditures in the following fiscal year to comply with the limits.

SECTION 2. This act shall take effect upon passage.