H 7421Cities & Towns

Towns and Cities - State Aid

Mandates state reimbursement to towns for state-mandated costs and requires a public report on unfunded school district expenses.

Held for study

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Affected

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Introduced Jan 30, 2026Committee House Education

Plain-English Summary

This legislation changes the law regarding how the state reimburses cities and towns for costs incurred due to state mandates. Previously, the law stated that the General Assembly "may" appropriate funds for these reimbursements; this bill changes that language to "shall," making the funding mandatory. Additionally, the bill requires the Department of Revenue to collaborate with local school districts to publish an annual public report. This report must identify costs borne by school districts that are either unfunded or only partially funded by the state, to assist in the budget planning process.

For younger readers

Sometimes the state government makes rules that cities, towns, and schools have to follow, which can cost a lot of money. Right now, the state doesn't have to pay the towns back for these costs if it doesn't want to. This bill changes the rules so the state *must* pay the towns back. It also says the government has to write a report showing how much money schools are spending on things the state isn't helping to pay for. This report will be put on the internet so everyone can see it.

Who & Where It Applies

Impacted groups

Cities and TownsSchool Districts (LEAs)Department of RevenueLocal Property TaxpayersState Budget Office

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

Amount unknown

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Increases transparency regarding education funding by requiring a public report on unfunded or partially funded costs borne by local school districts.
Protects community services by ensuring cities and towns are reimbursed for state mandates, preventing local budget cuts in other essential areas.
Alleviates pressure on regressive local property taxes by shifting the financial burden of state mandates back to the state government.
Mandating reimbursements reduces the state's budgetary flexibility, potentially diverting funds from other social safety net programs during economic downturns.
The bill focuses on reporting unfunded school costs but does not explicitly guarantee immediate additional funding to fix the specific deficits identified in that report.
Reimbursing all mandates equally might inadvertently subsidize wealthier municipalities that have a higher capacity to absorb costs, rather than targeting aid based on financial need.

For Conservatives

Enforces fiscal responsibility by preventing the state from imposing "unfunded mandates" on local governments without paying for them.
Protects local property owners from tax increases that are often driven by requirements and regulations passed down from the state level.
Increases government accountability by requiring the Department of Revenue to publicly disclose the actual costs of state rules imposed on school districts.
Creates an automatic spending obligation for the state, which could lead to higher state-level taxes to cover the mandatory reimbursements.
Expands the administrative state by requiring the Department of Revenue to generate new reports and coordinate data collection with every school district.
Reduces the legislature's ability to determine spending priorities year-to-year by locking in funding for mandates regardless of current revenue realities.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 9 additions · 1 deletion

SECTION 1. Section 45-13-9 of the General Laws in Chapter 45-13 entitled "State Aid" is hereby amended to read as follows: 45-13-9. Reimbursement to cities and towns and school districts for the costs of state mandates. (a)(1) The department of revenue shall submit to the budget office by October 1 of each year, a report by each city and town, of the cost of state mandates established after January 1, 1979, to be reimbursed for the next preceding July 1 — June 30 period.

(2) The budget office shall annually include the statewide total of the statement of costs of state mandates eligible to be reimbursed in the state budget for the next fiscal year for consideration by the governor in preparing a final budget proposal for submission to the general assembly in accordance with § 35-3-7 of the General Laws; provided, that any costs resulting from the rules and regulations of state departments or agencies shall be allocated to the budgets of those departments or agencies.

(b) The state treasurer shall in July of each year distribute to cities and towns the reimbursements for state mandated costs as ~~may~~ shall be appropriated by the general assembly.

(c) The department of revenue shall publish a report, in collaboration with local education agencies (LEAs), identifying costs borne by school districts that are partially funded or unfunded. The report shall be provided to the general assembly, offices of the speaker of the house, the senate president, and the governor, for consideration when preparing the final budget proposal to be submitted to the general assembly. The report shall be accessible to the public and published on the state transparency portal.

SECTION 2. This act shall take effect upon passage.