PROVIDENCE, R.I. (WPRI) — Gov. Dan McKee used his State of the State speech on Tuesday to deliver an optimistic assessment of Rhode Island’s battle against COVID-19, while making his case for using federal funds to prepare the state for the next decade.

“Understanding that COVID-19 is still going to be the topic of conversation for a bit longer, we know that it’s time to also start looking to the future,” McKee, a Democrat, said in his prepared remarks. “We can’t fall behind.”

The televised address, delivered in the R.I. House chamber at the State House, was McKee’s first time giving a State of the State since succeeding Gina Raimondo last March. The former governor left midterm to join the Biden administration as U.S. commerce secretary.

Due to the pandemic, McKee spoke to a scaled-down crowd of roughly 50 invited guests that included lawmakers, judges, cabinet directors, municipal leaders and members of his family. McKee touched on a variety of topics, including COVID-19, housing, education and the state’s small business community.

When discussing the pandemic, he talked up the successful aspects of his administration’s ongoing response, such as Rhode Island’s high ranking among all states for vaccinations and testing per capita.

“Rhode Islanders should be proud of how far we’ve come together,” McKee said.

The state is still facing serious challenges related to the pandemic, including an all-time high number of COVID-19 hospitalizations, which has required the federal government to send in a specialized team of military medical workers to support the state’s overwhelmed hospitals.

The governor’s effort to minimize restrictions and keep the economy open amid the latest surge of the pandemic further strained his relationship with Health Department Director Dr. Nicole Alexander-Scott, who announced last week she’s stepping down with several years left in her Senate-approved term.

Despite the friction, McKee praised Alexander-Scott in his speech “for her dedication and service to the state of Rhode Island.” The governor said he’s planning to name a group later this week that will search for an interim and permanent replacement for Alexander-Scott.

“Thank you, doctor,” McKee said.

Beyond the ongoing pandemic response efforts, McKee spent a large portion of his speech focused on his overall vision and his spending priorities for 2022 – a year when he will be on the ballot.

Later this week McKee is slated to unveil his proposed 2022-23 state budget, which he said wouldn’t include any “broad-base tax increases.” The proposal would come with his plan for how he wants Rhode Island to spend the roughly $1 billion in federal aid remaining from the federal American Rescue Plan Act. (Lawmakers have authorized spending about $119 million so far on small businesses, affordable housing and some social service programs.)

The governor said his ARPA spending proposal would “launch Rhode Island into the next decade with strength.”

“This is a big moment for us,” he added.

Watch: State of the State analysis (story continues below)

‘Housing they can afford’

More specific details are expected in the coming days, but the largest of McKee’s big-ticket items announced in Tuesday’s speech included a $250 million investment in housing for low- and moderate-income residents.

The governor argued the investment is needed because of the state’s ongoing housing crisis, exacerbated by soaring costs and an ongoing shortage of inventory. He pointed to the state’s relatively low level of new housing development in recent years, saying it’s not keeping up with neighboring states.

“The proposal that I’ll send to the General Assembly will not only create and preserve thousands of units of housing, but it will also transform blighted properties, strengthen communities, and create good-paying construction jobs in the process,” McKee said. “How can we expect our sons and daughters to stay in Rhode Island if they don’t have housing they can afford to live in?”

The proposal would also include $50 million for down-payment assistance that McKee said would be for “Rhode Island households who need it.”

“Did you know that homeownership is one of the most important ways to build generational wealth, yet Rhode Island has one of the lowest homeownership rates in the country, largely because families and individuals cannot afford the down payment?” McKee said. “It’s time to change that.”

‘Higher Ed Academy’

McKee also outlined other agenda items, such as expanding health care coverage for low-income children and women, fully funding K-12 education regardless of enrollment trends, and supporting new and existing job training programs.

The governor said he will seek to expand Medicaid for all children, while also extending coverage for new moms from 60 days to one year. McKee also wants to expand eligibility for families seeking financial support to pay for child care, saying “we cannot make progress without providing access to all children that live in the state of Rhode Island.”

On the topic of education, McKee said he plans to fully fund the state’s public school districts under the existing funding formula, and will not reduce education funding for districts that have seen enrollment drop during the pandemic. The proposal will likely come as welcome news to many public-school districts – including Providence – that have lost students over the last two years.

In all, McKee estimates his budget will also include $430 million for the construction of education facilities, including a $250 million school construction bond and millions more for projects at the University of Rhode Island and Rhode Island College.

The governor also announced a new initiative dubbed the “Rhode Island Higher Ed Academy,” which his aides explained would “help Rhode Islanders pursue postsecondary education and training that leads to good-paying jobs.”

The academy would be administered by the R.I. Office of the Postsecondary Commissioner, and it would be geared toward Rhode Islanders who missed out on higher education because of the pandemic.

“We expect to support over a thousand Rhode Islanders helping them gain the skills needed to be successful in obtaining a credential or degree,” McKee said.

‘Let’s make alcohol to-go permanent’

McKee said one portion of his budget would be dedicated entirely to supporting the state’s small businesses, estimating he’s already helped 3,600 small businesses stay afloat by providing grants from CARES Act money.

The budget proposal would include lowering the state’s corporate minimum tax, creating a “steward” in the R.I. Division of Taxation “dedicated to helping individuals and small businesses navigate the taxation process,” and enshrining in law the pandemic-era idea of “alcohol to-go.”

“Let’s make alcohol to-go permanent, an out-of-the-box idea that allows restaurants and brewpubs to sell alcoholic beverages with takeout food,” McKee said.

The governor’s other business initiatives included allocating $40 million for Real Jobs RI – a state-run job training program created by Raimondo – along with $10 million to “strengthen our minority business community and increase minority business ownership in the state.”

McKee also said his administration is “stepping up efforts to combat climate change,” promising a proposal including millions of dollars for climate-change investments would be rolled out on Wednesday. He said the proposal wouldn’t affect general revenue.

“Rhode Island is a national leader in clean energy innovation because we know that slashing greenhouse gases is not just the right thing to do for the environment – it’s also the right thing to do for our economy,” he said.

He pointed to the ongoing expansion of the offshore wind energy industry as one key area of future economic growth and job creation, saying Rhode Island needs to cultivate its ocean-related businesses and research, sometimes referred to as the “blue economy.”

GOP response

In a response to McKee’s state of the state address, House Minority Leader Blake Filippi criticized the governor for his “lawless” pandemic-era governance, bad decisions around educational policy and failure to leverage the state’s economic strengths.

“The uncomfortable truth about the pandemic is that our government has abandoned the rule of law and our system of checks and balances,” Filippi said in prepared remarks.

The Block Island Republican said the state’s decision for nearly two years to govern through a “never-ending stream of executive orders and regulations” has resulted in the shutting down of small businesses, places of worship and funerals.

“Most of Governor McKee’s recently executive orders are unlawful,” he said.

He also argued that the McKee administration too often makes decisions that benefit the “entrenched special interest who run this state,” pointing to a recent contract signed with the teachers union in the state-run Providence school district that he argued didn’t help students.

Filippi also called on McKee and R.I. Attorney General Peter Neronha to reject the proposed merger between Lifespan and Care New England, while also criticizing the state for supporting regulations that help large corporations at the expense of small businesses.

Overall, Filippi said the state has all the pieces it needs to succeed, including top-notch universities, infrastructure and location. But that that Rhode Island leaders too often perpetuate “divisive cultural issues” and ignore “important generational challenges,” ultimately resulting in the status quo.

“The truth is, in Rhode Island, it’s not about being a Democrat or Republican,” Filippi said. “It’s about those with power and influence who call the shots and always get ahead, versus those without power and influence who are always left to foot the bill and suffer the consequences. Rhode Island Republicans promise to always call out those who abuse their power and influence, and to defend those that suffer it.”

Election year

In addition to laying out his agenda, McKee’s speech also served as a chance to start making the case to voters for why they should support him as he prepares to seek a full term in this year’s election.

“I’m a lifelong Rhode Islander. I was born here and met my wife Susan here,” McKee said. “Rhode Island is where we raised our son and daughter and where I owned and operated small businesses in the Blackstone Valley. It is where I coached youth basketball and served as President of my hometown’s Boys and Girls Club.”

While he hasn’t formally launched his own campaign yet, McKee is expected to run, and he’s already drawn five challengers for September’s Democratic primary: Matt Brown, Helena Foulkes, Nellie Gorbea, Seth Magaziner and Luis Daniel Muñoz.

Multiple McKee challengers issued statements after the speech renewing their criticism of the governor, with Gorbea saying he “lacks the ability to lead our state decisively” and Foulkes arguing Rhode Islanders “need to elect a new governor with the management and leadership experience to get results.”

The next eight months will likely show how much of the governor’s agenda he can get accomplished. And how he navigates the state budget and the ongoing pandemic could make all the difference in McKee’s future political career.

“Just like you, when I sit down with my mom tomorrow morning at the kitchen table, I know we’ll still be talking about COVID-19 and understandably so, it’s still with us,” he said. “But I also hope we’ll be talking about the opportunity that lies ahead for Rhode Island, and how together, we can make it happen.”

Ted Nesi contributed to this report.