House Committee on Finance hears budget overview stressing federal HR 1 impacts and SNAP compliance risks

Sharon, the budget office presenter, told the House Committee on Finance that staff have had the governor's revised budget a short time and that federal changes in HR 1 were a central driver of this year's proposals and risks. "We have had the budget for a short period of time, 14 days, exactly," she said, and described analyses focused on tax policy, Medicaid and federal grants.

Why it matters: Sharon said the governor's proposal uses about $100,000,000 in one-time surplus funds while projecting a multi‑year gap — roughly a $237,000,000 opening for the out-year forecast that could grow to more than $500,000,000 over five years — and she urged committee members to weigh implementation costs and program risks when vetting proposals.

Key proposals and fiscal effects: Sharon outlined several revenue and spending moves in the governor's package. On taxes, she said changes to federal R&D expensing produce roughly a $36,000,000 negative revenue impact in current estimates and that the governor proposes partial "decoupling" to recapture about $45,000,000 over two years, leaving residual revenue loss in the estimates. The budget also proposes a new top income tax tier at $1,000,000 (estimated about $67,000,000 in 2027) and a phased reduction in Social Security taxation that would reach larger costs in later years.

Health care and caseloads: Sharon told the committee HR 1 revisions to eligibility and new community engagement/work requirements are expected to reduce enrollment in certain adult expansion categories — an estimate she placed at roughly 35,000 enrollees — generating about $62,000,000 in expenditure reductions in 2027. She said the governor proposes implementing half of an OHIC rate increase for providers (a spending impact Sharon estimated around $58,200,000) while also capping statutory growth on many provider rates at roughly 2.5% in specific areas.

SNAP, implementation risk and IT: Sharon said HR 1 changes shift SNAP administrative cost share and expose the state to penalties linked to payment error rates. She described a proposed office of program integrity, additional frontline staff and contracted services, and UHIP programming and analytics to support compliance. On the trade‑off of investment versus risk, she said, "If $8,600,000 seems like a lot of money, $50,000,000 a year is also a lot of money," summarizing the potential scale of penalty exposure the state could face under adverse error‑rate scenarios. The presentation listed implementation funding of about $45,000,000 (all funds) with approximately $20,000,000 from general revenues for initial compliance work.

Other elements: Sharon described a marketplace premium assistance authority the governor would like to start in 2027 ($9,500,000 listed as half‑year funding in the request), a one‑time Planned Parenthood grant, restoration of some previously assumed savings across agencies, and capital‑side proposals including roughly $600,000,000 of borrowing across six ballot questions (which Sharon said could add about $50,000,000 annually in debt service if all approved). She also noted transportation moves — shifting some DOT maintenance fee revenue, a proposed 2¢ gas tax reduction, and RIPTA bus funding — and cautioned that toll revenue assumptions differed across capital and operating documents.

Committee questions: Committee members asked clarifying questions. Brett Rabnatone asked whether the $26,000,000 tax amnesty simply waives penalties; Sharon replied that taxpayers must apply for owed taxes through tax year 2025, would avoid penalty or prosecution and would receive a 25% reduction in interest. On SNAP oversight, Sharon said federal Food and Nutrition Service (FNS) plays an audit role and that the proposed state investments aim to reduce the chance of multi‑million dollar penalty exposure. Rev Diaz asked whether the $25,000 nonprofit grants are per organization; Sharon confirmed the amount is per organization.

Next steps: Sharon said article hearings are scheduled to begin next week, agency hearings will follow, and subcommittee review will likely start in March as the committee and staff continue to analyze details. The committee heard the presentation and concluded with no formal action taken at this meeting.

Ending: The committee adjourned after members thanked Sharon and budget staff and noted the upcoming hearing schedule.