In proposing the state’s budget in February, Gov. Donald L. Carcieri conceded it was going be a difficult fiscal year. But what he didn’t anticipate was a difficult political year as well, with the General Assembly rejecting major proposals in the tax-and-spend plan for FY 2008.
With the Assembly likely on vacation until January and another difficult fiscal year looming, the governor spoke with Providence Business News about the financial situation the state is facing and what it means for his relationship with the Assembly.
PBN: How would you classify your relationship with the General Assembly?
CARCIERI: My relationship with the General Assembly is fine. I get along with the vast majority of them one on one. What you have disagreements about are policy issues or specific pieces of legislation. … The biggest concern I had this year – and the biggest difference between myself and the General Assembly – is that I don’t think they are recognizing the severity of the budget and financial situation we are facing.
PBN: But there was a public perception that the relationship was worse this year.
CARCIERI: Well it was, because I don’t think they really did anything besides pass a bad budget that included stopping the governor from doing good things for the taxpayers. At least we got the flat tax [income tax option] done last year … and we got pension changes done [previously]. … I don’t know what happened this year.
PBN: Why are we facing this situation with the budget?
CARCIERI: We are facing this because we are creating it. We have been embarking on tax reductions. … We’ve got large tax credits that we’re absorbing that are all good investments for the long term of the state. … Virtually every state in the last several years has raised taxes. We didn’t; we’re cutting them. … We’re moving in the right direction on the tax burden, but we have to cut our spending accordingly.
PBN: What is the projected deficit for next year?
CARCIERI: I think that number I have seen is $300 million, plus or minus.
PBN: How do you get the Assembly on board in the remaining three years of your term?
CARCIERI: The facts get us working together. … I think we’re going to have to deal with more spending reductions, which means work force reductions. … The benefit structures are going to have to be looked at. The pensions are going to have to be looked at. We did some changes, but not enough. … We’re going to have to look at a defined contribution plan – instead of a defined benefit plan – for new employees. … Where we will conflict – if they choose to go down this road, and they didn’t this year – is any tax increase.
PBN: How would you describe negotiations with labor this year?
CARCIERI: It never got to where it needed to get to. There was a lot of discussion, and they were willing to concede some things on co-pays, medical, co-shares and so forth. But they wanted an extension of the contract for three years. … When you looked at every dollar they were going to give us, they were getting three back again. It was clear to me we were going nowhere. … I don’t think labor understands the severity of the problem facing us and the magnitude of the concessions that are going to have to be negotiated.
PBN: So what are going to do next year?
CARCIERI: The contracts are going to expire in June 2008. … They vary, but the vast majority are up in June. In the meantime, we’re going to go ahead with the work force reduction. We’re going to do it very thoughtfully, very systematically.
PBN: What was your view of the 11th-hour move to block your attempts to privatize some state services?
CARCIERI: Many services can’t be privatized, but many can be, like dietary services, housekeeping services, payroll services. There are companies that do these things for a living, so it’s much easier to control costs and identify costs. We said we were going to privatize them, and what does [labor] do? They go to the legislature … and they get a bill passed. It didn’t go through committee, it didn’t get a hearing. … That to me is the very kind of thing that fuels a negative relationship, when there is no discussion of this whatsoever.
PBN: Did anything aside from budget issues upset you this session?
CARCIERI: I think one of the most disgraceful things happened in the Senate, when they did not take up the Department of Environmental Management bill regarding the [Southern Union] cleanup in Tiverton. There’s 250-odd people there that have been in limbo for six years. They can’t even plant a garden in their yard because they can’t turn over the earth with what’s happened. We’ve been doing everything we can to get this resolved for them. Southern Union has filed suit against us, challenging us in federal court, state court, administratively – every front. They’ve hired every lawyer they can to delay and stop this. Under the fines right now – $1,000 a day, which is the maximum DEM can fine them – $365,000 for a company that size is nothing. So we put in a bill … to increase the fines to $50,000, and the bill was amended to $40,000 per day. The point was that $1.2 million, $1.3 million a month, we’ll get them to the table for a serious conversation on how we settle this. … Who would be against this? It went through the House on the last day of the session, went over to the Senate and the Senate refused to move on it. … It was one of the worst nights in my time in this job.
