Carcieri would cut municipal aid by $10M in FY09

PROVIDENCE – Gov. Donald L. Carcieri today unveiled a $6.89 billion budget proposal for the State of Rhode Island that calls for drastic changes to the Medicaid and welfare systems, assumes the termination of hundreds of state workers in the next fiscal year and cuts state aid to cities and towns by $10 million from this year’s level.
Carcieri said his proposal, as submitted to the R.I. General Assembly, would resolve the $384 million shortfall projected for fiscal 2009. (That anticipated shortfall comes on top of the $150 to $170 million budget gap anticipated in the current fiscal year. READ MORE.)
As part of what the governor called “re-engineering” in state spending, the budget plan would also consolidate several state departments and assumes the privatization of some state duties. The proposal represents an $89 million, or 1.3 percent, decrease from the $6.97 billion budget approved by lawmakers for the current fiscal year, which ends in June.
The Carcieri administration said the tax-and-spending package for fiscal year 2009 – which begins July 1 –  would hold the line on major taxes, including income tax, sales tax, capital gains tax and the alternative flat tax. In fact, general revenue is projected to decrease 2.7 percent to $3.35 billion in fiscal 2009, the administration said.
Meanwhile, the governor’s proposal calls for $3.27 billion in spending funded from general revenue – a reduction of $130.9 million or 3.8 percent from the amount in the enacted budget for this fiscal year.

In his 2 p.m. State House news conference, Carcieri described the proposed spending decrease as “historic.”
“Nobody can recall a time when our state has had to do this,” he said. “I’m doing it because the crisis we face, in my judgment, is also historic.”

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Carcieri’s spending recommendation is just the first step in a budget process that is expected to be extremely contentious this legislative session, as the Republican governor and the Democrat-controlled Assembly grapple with fiscal 2009’s projected state deficit of more than $384 million.
Most of the proposed savings would come from personnel, human services and payments to cities and towns, the governor said.
The budget proposal’s highlights include:

• Encouraging elderly and disabled Ocean State residents on Medicaid to seek care at home, when appropriate – through visiting nurses or at assisted-living facilities – rather than at more expensive nursing homes.
• Reforming the reforming the state welfare plan – the Family Independence Program – by setting a two-year limit on cash assistance for families, down from the existing five-year limit.
That and other changes in state entitlement programs would generate $66.7 million in savings in the next fiscal year, the administration said.
• Paring the state work force by 627 employees – compared with this fiscal year – as the administration continues with its plan to cut 1,000 jobs. That reduction would translate into savings of $41 million in salaries and benefits in the next fiscal year, the budget plan says.

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• Reducing personnel costs by another $60.6 million, savings that R.I. State Budget Officer Rosemary Booth Gallogly said are being negotiating with the unions representing state employees.
At a press briefing today, she refused to elaborate on those proposed savings. “The number is based on something, but I’m not going to say what that something is,” Gallogly said. “I’m not going through the details – we’re in negotiations.”

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According to the governor, his budget plan would cut “revenue sharing” to cities and towns by $10 million from that in the budget enacted for fiscal 2008.
Local education aid would increase to $910.4 million – a reduction of $25.7 million or 2.9 percent from this year’s enacted budget. But excluding increases in construction aid and teacher-retirement payments, education aid to municipalities would be level-funded.

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