PROVIDENCE – Gov. Donald L. Carcieri on Tuesday unveiled a $7.51 billion proposed state budget for 2010-11 that would continue drastic cuts in local aid, eliminate the film tax credit and depend on more federal stimulus dollars to close a $427 million shortfall.

As expected, Carcieri also proposed spending $10 million on a new tax credit for small businesses that hire more workers and $11.5 million to cut the minimum tax on most businesses in half, from $500 to $250.

The Carcieri administration said the proposed budget would not increase broad-based taxes in the 2011 fiscal year, which starts July 1, although residents would pay new fees at the R.I. Department of Motor Vehicles and when crossing the new Sakonnet River Bridge.

The General Assembly, where Democrats hold a veto-proof majority, now must decide whether to accept the governor’s proposal or make changes.

At an afternoon news conference at the Statehouse, the governor said he had heard rumblings of legislators considering a reduction or the elimination of the alternative flat income tax for wealthy taxpayers. He warned that he would reject a state budget that included broad-based tax increases or flat tax reductions.

“We’ve got to resist the temptation to eliminate what I think is one of the few things that makes us more competitive,” Carcieri said of the flat tax.

Carcieri also touted what he is calling the Small Business Jobs Growth Tax Credit program. Under the terms outlined Tuesday, small business with between five and 100 employees would receive a $2,000 tax credit for each additional employee hired between July 2010 and December 2011.

To qualify, those workers would have to be Rhode Island residents who within the previous two years had either collected unemployment benefits or graduated from a college or technical school.

A qualified employee must work a minimum of 30 hours; earn at least 250 percent of the state minimum wage, or $18.50 an hour; and be eligible for health insurance. They also must stay in the job for at least 18 months.

Administration officials projected that as many as 3,625 qualified workers would be hired because of the tax credit. In addition, officials said the reduction of the minimum corporate/franchise tax from $500 to $250 could benefit as many as 46,100 small-business owners.

The intention of the credit is to nudge companies that are “on the cusp of hiring,” Carcieri said.

He said his administration would introduce legislation later this week that would give small businesses better access to credit.

The measure would hike the ceiling on the R.I. Industrial Recreational Building Authority guarantee program from $20 million to $80 million. Carcieri said the program would provide “credit enhancement” to push banks and bond purchasers to provide financing at good rates to credit-worthy companies.

Carcieri’s budget would cut total state spending in fiscal 2011 by nearly 4 percent, or $301.8 million, compared with the $7.81 billion budget for the current year that lawmakers approved last June.

Administration officials said the bulk of the year-over-year reduction in spending came from cuts to local aid and a smaller infusion of funds from the $787 billion economic stimulus law signed by President Barack Obama early last year.

Carcieri would spend $2.85 billion from the state’s general revenue, a reduction of 5 percent ($151.3 million) from this year.

That plan would reduce the share of the budget paid for by general revenue from 40.4 percent this year to 37.9 percent. The federal government would pick up 36.2 percent of the tab, or $2.7 billion, up from 34.7 percent this year.

For the second consecutive year, Carcieri did not call for layoffs among the state’s roughly 13,000 workers in his budget blueprint. This time, he was bound by an agreement with public-employee unions that requires him to avoid layoffs and furloughs in exchange for concessions such as a delayed pay increase.

Carcieri recommended that the state withhold all $135.3 million in auto tax payments to cities and towns next year. The governor already asked the General Assembly to withhold the payments for the final two quarters of this fiscal year.

In addition, the governor’s budget would eliminate $26.9 million in general education aid to local communities.

The spending plan assumes a $455.69 million infusion of stimulus dollars from the federal government. That includes an additional $95.3 million in Medicare reimbursement money under a formula that has not yet been approved by Congress, although passage is expected.

A proposal to eliminate the tax credit for film and television production would save $1.9 million next fiscal year, officials said. A plan to close out the enterprise zone tax credit would save another $1 million. Another $30.6 million would be saved as the state winds down the tax credit for the rehabilitation of historic structures, administration officials said.

Officials also offered a grim forecast for the years ahead – the administration projects a combined deficit of $1.77 billion between 2012 and 2015 under current policy.

Additional information, including the full budget document, is available at budget.ri.gov.