Carcieri proposes slashing local aid, raising taxes

PROVIDENCE—Gov. Don Carcieri proposed an emergency budget plan Wednesday that would slash state funding for cities and towns, raise taxes and delay paying a legal settlement over a deadly nightclub fire to close a massive budget deficit worsened by a sinking economy.

The nearly $7 billion budget plan attempts to close an estimated $357 million shortfall for the fiscal year ending in June, almost 11 percent of expected state spending. Rhode Island had a 9.3 percent unemployment rate in November, one of the worst in the country.

Read Gov. Don Carcieri’s speech

The state’s economy fell earlier and faster than the rest of the nation as its housing bubble burst, its manufacturing sector suffered continuing job losses and a national credit crisis squeezed the small businesses that dominate Rhode Island’s economy.

“I anticipate that things are likely to get worse before they get better,“ Carcieri said in remarks prepared for a live television address.

Democrats hold a veto-proof majority in the General Assembly and can easily revamp budget plans from the Republican governor. House Speaker William Murphy could not immediately comment on Carcieri’s proposal, his spokesman said.

Under the proposal, Rhode Island would cut state funding to already-strained cities and towns by almost $75 million. Towns might lay off workers and school teachers, pick up trash less frequently or do less plowing after snowstorms, said Daniel Beardsley Jr., executive director of the Rhode Island League of Cities and Towns.

As compensation for the funding cuts, Carcieri has proposed saving school districts money by centralizing school food services, creating a statewide purchasing system for school supplies, increasing health care co-payments for municipal workers and limiting their pension benefits.
Carcieri also wants to delay paying a $10 million legal settlement to survivors and family members of victims killed in a Feb. 20, 2003, blaze at The Station nightclub in West Warwick. The governor intends to make the payment during the next budget year, Carcieri spokeswoman Amy Kempe said.

The blaze began when a rock band’s pyrotechnic display ignited flammable soundproofing foam lining the club’s walls and ceiling. Victims sued Rhode Island because a fire marshal failed to notice
the foam during an inspection.

Carcieri has refused to raise personal income, sales or corporate taxes to close the budget shortfall. But his plan would include a $1 hike in the state’s cigarette tax, raising it to $3.46 per pack. It would also raise $3.7 million by increasing taxes on health insurance companies.

The state work force could see benefit cutbacks. Facing budget deficits last year, Carcieri and lawmakers decided to reduce retirement benefits for state workers, prompting more than 1,700 to leave. The governor’s current budget plan would reduce automatic cost-of-living increases for state employees who retire after April 1 and scale back pensions for disabled workers.