State leaders tell Middletown council budget will be tight; urge housing strategy that fits island

Senators and representatives who met with the Town of Middletown’s council warned the town that the state will face a structural budget shortfall and encouraged local leaders to press for housing programs tailored to island needs.

State lawmakers speaking to the council said November revenue estimates point to a deficit “in the several hundred million dollar range,” and that Medicaid and K–12 education are the largest items in the General Fund. “Medicaid costs are the single highest cost in the state,” a state senator told the council, describing Medicaid spending at roughly $1.3–$1.4 billion and K–12 aid at about $1.2 billion from a roughly $5 billion general revenue pot.

Why it matters: Those figures set the context for what state lawmakers and the governor will prioritize during the legislative session; town officials cannot expect large new municipal appropriations unless the state’s fiscal picture improves. For Middletown, local leaders pressed lawmakers to make housing investments that recognize the island’s constraints and anchor employers, and to make state housing criteria less biased toward dense urban projects.

What lawmakers told the council
- Budget constraints: Lawmakers described a structural deficit and said governors can only appropriate a percentage of estimated revenues (noting a regulatory framework that directs a portion of revenue to a rainy-day fund). They said the state will prioritize mandatory spending and closely scrutinize “nice-to-have” proposals.
- Medicaid pressures: Speakers said Medicaid enrollment and inflation in provider rates drove recent increases; they noted Rhode Island moved to regular Medicaid rate reviews and cited workforce and provider reimbursement as key policy levers.
- Housing: Lawmakers and staff urged the council to press Rhode Island Housing and the Department of Housing to adopt bifurcated scoring or separate pots for cities and towns. The council heard that current scoring favors larger, denser projects and can penalize smaller towns that propose developments consistent with local character. One legislator said anchor institutions — notably Naval Station Newport and related defense employers — should factor into state housing priorities for communities that host those employers.

Local concerns raised
Council members and residents pressed for more predictable school construction funding, protection for local utilities and coastal infrastructure, and more state support to bury power lines and improve resiliency. They also asked about the ability of state programs to prioritize smaller-scale, context-sensitive housing near key employers.

What was decided or directed
No formal votes altered town policy at the meeting. Lawmakers encouraged the council to compile priorities the delegation can carry to the General Assembly. Town officials and the state delegation agreed to continue the conversation about housing criteria and to brief state housing officials on the island’s anchor-institution needs.

Key speakers (from meeting transcript)
Senator DePalma — state senator representing the region (spoke about budget and Medicaid).Representative Finkelman — state representative (spoke about housing coverage on the island).Sean Brown — Town Administrator, Town of Middletown (facilitated discussion).Rick McAuliffe — contract lobbyist for Town of Middletown (described federal funding and congressional outreach).

Clarifying detail: lawmakers said Medicaid is jointly funded by state and federal sources and that states’ shares vary; they did not promise new municipal aid and said budget year numbers will be revisited when updated figures arrive in May. The delegation urged the town to present concrete priorities to improve their advocacy.