AN ACT RELATING TO TAXATION -- CITY OF PROVIDENCE: TRANSFER OF PORTION OF STATE INCOME TAXES OF NEW EMPLOYEES OF NOT-FOR-PROFIT HEALTH CARE INSTITUTIONS AND EDUCATIONAL INSTITUTIONS (Provides that a portion of state income taxes from employees working at not-for-profit healthcare institutions, health service institutions, and educational institutions be allocated to the city of Providence.)

S3227

2026 -- S 3227
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LC004021
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO TAXATION -- CITY OF PROVIDENCE: TRANSFER OF PORTION OF
STATE INCOME TAXES OF NEW EMPLOYEES OF NOT-FOR-PROFIT HEALTH CARE
INSTITUTIONS AND EDUCATIONAL INSTITUTIONS

Introduced By:
Senators Burke, Ciccone, Bissaillon, Mack, Famiglietti, Kallman,
Patalano, and Thompson

Date Introduced:
April 20, 2026

Referred To:
Senate Finance
It is enacted by the General Assembly as follows:
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SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by
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adding thereto the following chapter:
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CHAPTER 73
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CITY OF PROVIDENCE: TRANSFER OF PORTION OF STATE INCOME TAXES OF NEW
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EMPLOYEES OF NOT-FOR-PROFIT HEALTH CARE INSTITUTIONS AND
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EDUCATIONAL INSTITUTIONS
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44-73-1. Definitions.
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As used in this chapter, unless the context clearly indicates otherwise:
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(1) “City” means the city of Providence.
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(2) “Director” means the director of the state division of taxation.
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(3) “Educational institution” means any not-for-profit provider of higher education
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including, but not limited to, private colleges and universities.
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(4) “Healthcare institution” means any facility or campus providing not-for-profit
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healthcare services including, but not limited to, hospitals and other licensed inpatient centers,
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ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers,
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convalescent, extended care and rehabilitation facilities, health maintenance organizations, health
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clinics, free-standing emergency rooms, diagnostic, laboratory and imaging centers, visiting
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nurses’ associations, or other therapeutic health settings.

1

(5) “Health service corporation” means any not-for-profit entity formed for purposes
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including, but not limited to, establishing, maintaining managing and operating a healthcare system,
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service, network or plan, for conducting scientific or medical research, and/or for training health
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care providers and researchers.
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(6) “Initial employment level” means for the tax year January 1, 2025 to December 31,
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2025, the aggregate and average numbers of persons employed by the institution for whom state
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income taxes were withheld and reported to and/or paid to the state division of taxation.
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(7) “Institution” or “institutions” means collectively not-for-profit healthcare institutions,
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health service corporations, and educational institutions as defined in this subsection.
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(8) “New employee” or “new employment” means for each calendar year beginning
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January 1, 2026, the number of persons employed by the institution during that year, over and above
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the number of employees reported as the initial employment level, and for whom state income taxes
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were withheld by an institution and submitted and/or paid to the state division of taxation.
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(9) “Not-for-profit corporation” means a legal entity, whether a corporation, partnership or
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other entity, formed for some charitable or benevolent purpose and not-for-profit which has been
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exempted from taxation pursuant to the Rhode Island general laws or Internal Revenue Code §
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501(c)(3), 26 U.S.C. § 501(c)(3).
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(10) “State” means State of Rhode Island.
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44-73-2. Procedures.
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(a) No later than July 30, 2026, all institutions defined in § 44-73-1 shall provide to the
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director the initial employment level for the institution for the calendar year 2025, and the total
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amount of state income taxes withheld from the payroll and provided to the state department of
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revenue for the aggregate number of employees for the calendar year 2025, A copy of the
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information shall at the same time be provided to the city’s chief financial officer.
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(b) No later than December 31, 2026, each institution shall provide the director and the
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city’s chief finance officer with the following:
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(1) The aggregate number of new employees for the period January 1, 2026 through
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December 31, 2026 for whom state income taxes were withheld and submitted to the state
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department of revenue; and
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(2) The total amount of annual state income taxes submitted to the division of taxation for
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all new employees.
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(c) No later than December 31 of each subsequent calendar year, each institution shall
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provide the director and the city’s chief finance officer with the following:
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(1) The aggregate number of new employees for the individual calendar year; and

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(2) The total amount of annual state income taxes submitted to the division of taxation for
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all new employees for the individual calendar year, including estimated state taxes; and
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(3) The total aggregate number of employees for all calendar years since the initial
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reporting period; and
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(4) The total amount of annual state income taxes submitted to the division of taxation,
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including estimated state taxes, for the total aggregate number of employees for all calendar years
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since the initial reporting period.
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(d) All data provided to the director and the chief financial officer shall be signed by the
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person compiling the data and the person authorized to sign on behalf of the corporation.
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(e) No later than September 1 of each fiscal year beginning with fiscal year 2028, the state
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shall remit or transfer to the city treasurer an amount representing twenty-five percent (25%) of the
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state income taxes of the aggregate number of total new employees since the initial reporting period.
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SECTION 2. Section 35-4-1 of the General Laws in Chapter 35-4 entitled "State Funds" is
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hereby amended to read as follows:
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35-4-1. Revenue credited to general fund — Exceptions — Deposits.
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All receipts and revenue of the state shall be credited by the general treasurer to the general
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fund of the state with the exception of receipts or revenue pertaining to the following funds:
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(1) Permanent school fund;
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(2) Touro Jewish synagogue fund;
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(3) Land-grant fund of 1862;
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(4) Veterans’ home fund;
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(5) United States cooperative vocational education fund;
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(6) United States industrial rehabilitation fund;
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(7) Forestry cooperative fund;
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(8) State sinking fund;
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(9) Fire insurance fund;
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(10) Fund for relief of firemen;
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(11) Fund for relief of policemen;
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(12) Coastal Resources Management Council Dredge Fund;
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(13) Funds received from the federal government in accordance with the provisions of parts
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1 and 2 of title V of the Social Security Act, 42 U.S.C. § 501 et seq.;
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(14) Any other funds that may by federal law or regulation, or by enactment of the general
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assembly, be allocated to a specific fund, provided, that nothing contained in this section shall
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amend or modify: § 19-3.1-9, which pertains to securities deposited by trust companies and national

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banks having trust departments; § 19-5-15, which pertains to credit unions; nor § 27-1-5, which
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pertains to deposits of securities by insurance companies with the general treasurer;
and
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(15) Funds received until June 30, 2002, from the northeast dairy compact commission,
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which was enacted into law in Rhode Island by P.L. 1993, ch. 106, § 2-24-1 et seq. These funds
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are to be passed from the northeast dairy compact commission through the department of
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elementary and secondary education to reimburse school districts for school milk that is exempted
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from the federal over-order price regulation obligation at 7 CFR 1301. These funds are to be placed
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in a restricted receipt account established within the department of elementary and secondary
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education separate from all other accounts within the department of elementary and secondary
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education. All funds deposited in the restricted receipt account established in this section shall be
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disbursed prior to June 30, 2002
; and
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(16) State withholding taxes received by the director of revenue for calendar years 2026
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and thereafter, which shall be remitted to the city of Providence pursuant to chapter 73 of title 44
.
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SECTION 3. Section 45-13-1 of the General Laws in Chapter 45-13 entitled "State Aid" is
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hereby amended to read as follows:
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45-13-1. Apportionment of annual appropriation for state aid.
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(a) As used in this chapter, the following words and terms have the following meanings:
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(1) “Income” means the most recent estimate of per-capita income for a city, town or
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county as reported by the United States Department of Commerce, Bureau of the Census.
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(2) “Population” means the most recent estimates of population for each city and town as
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reported by the United States Department of Commerce, Bureau of the Census.
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(3) “Reference year” means the second fiscal year preceding the beginning of the fiscal
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year in which the distribution of state aid to cities and towns is made provided however that the
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reference year for distributions made in fiscal year 2007-2008 shall be the third fiscal year
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preceding the beginning of the fiscal year 2007-2008 and provided further that the reference year
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for distributions made in fiscal year 2008-2009 shall be the fourth fiscal year preceding the
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beginning of the fiscal year 2008-2009.
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(4) “Tax effort” means the total taxes imposed by a city or town for public purposes or the
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totals of those taxes for the cities or towns within a county (except employee and employer
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assessments and contributions to finance retirement and social insurance systems and other special
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assessments for capital outlay) determined by the United States Secretary of Commerce for general
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statistical purposes and adjusted to exclude amounts properly allocated to education expenses.
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(b) Aid to cities and towns shall be apportioned as follows: For each county, city or town,
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let R be the tax effort divided by the square of per capita income, i.e., R = (tax effort)/(income x

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income).
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The amount to be allocated to the counties shall be apportioned in the ratio of the value of
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R for each county divided by the sum of the values of R for all five (5) counties.
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The amount to be allocated for all cities and for all towns within a county shall be the
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allocation for that county apportioned proportionally to the total tax effort of the towns and cities
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in that county.
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The amount to be allocated to any city or town is the amount allocated to all cities or all
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towns within the county apportioned in the ratio of the value of R for that city (or town) divided by
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the sum of the values of R for all cities (or all towns) in that county; provided, further, that no city
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or town shall receive an entitlement in excess of one hundred forty-five percent (145%) of that city
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or town’s population multiplied by the average per capita statewide amount of the annual
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appropriation for state aid to cities and towns. Any excess entitlement shall be allocated to the
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remainder of the cities and towns in the respective county in accordance with the provisions of this
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section.
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For fiscal year 2004, notwithstanding the provisions of subsection (a), aid calculations shall
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be based on a blended rate of ninety percent (90%) of the data from the 1990 census and ten percent
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(10%) of the data from the 2000 census. In each of the succeeding nine (9) fiscal years, the
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calculations shall be based on a blended rate that increases the percentage of data utilized from the
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2000 census by ten percent (10%) from the previous year and decreases the percentage of the data
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utilized from the 1990 census by ten percent (10%) from the previous year.
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(c) The total amount of aid to be apportioned pursuant to subsection (b) above shall be
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specified in the annual appropriation act of the state and shall be equal to the following:
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(1) For fiscal years ending June 30, 1994 through June 30, 1998, the total amount of aid
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shall be based upon one percent (1%) of total state tax revenues in the reference year.
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(2) For the fiscal year ending June 30, 1999, the total amount of aid shall be based upon
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one and three-tenths percent (1.3%) of total state tax revenues in the reference year.
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(3) For the fiscal year ending June 30, 2000, the total amount of aid shall be based upon
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one and seven-tenths percent (1.7%) of total state tax revenues in the reference year.
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(4) For the fiscal year ending June 30, 2001, the total amount of aid shall be based upon
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two percent (2.0%) of total state tax revenues in the reference year.
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(5) For the fiscal year ending June 30, 2002, the total amount of aid shall be based upon
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two and four-tenths percent (2.4%) of total state tax revenues in the reference year.
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(6) For the fiscal year ending June 30, 2003, the total amount of aid shall be based upon
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two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

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(7) For the fiscal year ending June 30, 2004, the total amount of aid shall be based upon
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two and seven-tenths percent (2.7%) of total state tax revenues in the reference year.
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(8) For the fiscal year ending June 30, 2005, the total amount of aid shall be fifty-two
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million four hundred thirty-eight thousand five hundred thirty-two dollars ($52,438,532).
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(9) For the fiscal year ending June 30, 2006, the total amount of aid shall be based upon
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three percent (3%) of total state tax revenues in the reference year.
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(10) For the fiscal year ending June 30, 2007 the total amount of aid shall be sixty-four
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million six hundred ninety-nine thousand three dollars ($64,699,003).
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(11) For the fiscal year ending June 30, 2008, the total amount of aid shall be sixty-four
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million six hundred ninety-nine thousand three dollars ($64,699,003).
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(12) [Deleted by P.L. 2009, ch. 68, art. 6, section 3.]
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(13) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]
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(14) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]
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(d) For the fiscal year ending June 30, 2008 the apportionments of state aid as derived
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through the calculations as required by subsections (a) through (c) of this section shall be adjusted
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downward statewide by ten million dollars ($10,000,000).
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(e) For the fiscal year ending June 30, 2009, the total amount of aid shall be twenty-five
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million dollars ($25,000,000) with such distribution allocated proportionately on the same basis as
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the original enactment of general revenue sharing of FY 2009.
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(f) For the fiscal year ending June 30, 2009 and thereafter, funding shall be determined by
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appropriation
; provided, however, that no portion of the state income tax paid to the city of
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Providence pursuant to chapter 73 of title 44 shall be considered part of an appropriation or
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allocation to the city of Providence under this chapter, but shall be considered a separate allocation
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to the city
.
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SECTION 4. This act shall take effect upon passage.
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LC004021
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- CITY OF PROVIDENCE: TRANSFER OF PORTION OF
STATE INCOME TAXES OF NEW EMPLOYEES OF NOT-FOR-PROFIT HEALTH CARE
INSTITUTIONS AND EDUCATIONAL INSTITUTIONS
***
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This act would provide that a portion of state income taxes from employees working at not-
2
for-profit healthcare institutions, health service institutions, and educational institutions be
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allocated to the city of Providence to offset expenses related to the growth in the healthcare and
4
educational areas.
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This act would take effect upon passage.
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LC004021
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