R.I. House approves state budget

PROVIDENCE -- House lawmakers unanimously approved a $6.9 billion dollar budget plan last night that makes deep cuts in state spending.

The plan now heads to the Senate for a vote. Gov. Don Carcieri is urging lawmakers to pass it.

The proposed budget does not significantly raise personal income, sales or corporate taxes. But it chops away at welfare and health care coverage for the poor.

Carcieri, a Republican, and Democratic lawmakers have tried for months to close a spending shortfall of at least $422 million -- or nearly 12 percent of expected state spending -- without significantly increasing taxes. It is Rhode Island's worst fiscal crisis in almost two decades.

Even with the approved budget plan, the state will still face years of financial turmoil. Budget analysts estimate Rhode Island will face deficits of hundreds of millions of dollars into 2013.

Democratic leaders say they are not convinced the budget plan is balanced and say additional cuts will be needed. The Senate could consider the plan later this week.

Lawmakers are considering eliminating a program designed to pay for renovations making the homes of the poor more energy efficient. Starting next year, the program also was supposed to provide discounted gas, electricity and heating oil to the needy.

Although approved in 2006, the effort was never funded by the state. It was expected to cost $4.2 million for the year starting in July.

Democratic leaders say the budget also includes a compromise with Carcieri that caps welfare payments at four years, instead of the current five-year limit. Carcieri had pushed for a two-year limit, while Democratic lawmakers originally voted to maintain the current cap.

A caustic debate over illegal immigration erupted on the House floor after Rep. Peter Palumbo proposed ending state-funded health care for pregnant women who are illegal immigrants. The program costs the state about $400,000 per month. His proposal failed.

"If the parents made the decision to come here illegally, why does the child suffer?'' said House Majority Leader Gordon Fox, who urged lawmakers to defeat the proposal.

Other social welfare programs also would be reduced. The plan would kick 1,000 adults off state-subsidized health care rolls to save money. Carcieri originally planned to cut coverage for some 7,400 people.

The budget proposal would not increase personal income, sales or business taxes. But it could cost residents money in other ways.

Lawmakers want to raise an extra $5.6 million by increasing taxes on health insurers, including Blue Cross & Blue Shield, United HealthCare of New England and Delta Dental. Those companies could respond by increasing costs for their subscribers.

Fines for motor vehicle offenses would also increase by $10, raising an estimated $1.4 million in extra revenues.

The budget plan depends on several uncertain calculations that could easily throw it off balance.

Carcieri has proposed saving $67 million by negotiating a limit on Medicaid spending with the federal government. In return for agreeing to the spending cap, the state hopes to win greater flexibility to run its Medicaid program. Carcieri has not submitted his plan to federal regulators, and the approval process could take months.

The governor also hopes to win $61 million by renegotiating salary and other benefits with state employee labor unions. So far, they have not struck a deal.