PROVIDENCE – Gov. Donald L. Carcieri tonight unveiled a mid-year state budget package that calls for a $153.89 million cut in local aid, assumes $54 million in savings from pension reforms and eliminates more than 490 vacant jobs as part of an effort to close a projected $357.4 million shortfall.

In total, the governor’s package presumes $240.3 million in spending cuts or elimination of expenses, $24.1 million in new taxes and fees, and $93.0 million in one-time revenue or deferral of already approved expenditures.

Officials from the Carcieri administration said the supplemental budget recommendations would decrease state expenditures by $189.8 million – a 5.8-percent cut – but the changes would not require the layoffs of any state employees.

The proposal, as submitted to the General Assembly, avoided broad-based tax increases feared by the business community, but it did include a cigarette tax hike – from $2.46 to $3.46 a pack – that would generate an estimated $17.4 million in new revenue. And it would increase the cost of some fees at the Department of Motor Vehicles.

Carcieri’s plan would drastically change Rhode Island’s public employee pension system, doing away with cost-of-living adjustments for new retirees – currently a guaranteed 3 percent a year - and establishing a minimum retirement age of 59. Currently, state workers can retire after 20 years of the job.

The supplemental budget also assumes that the state will receive an additional $27.5 million for Medicaid from the federal stimulus package, and assumes $10.5 million in savings from the Medicaid global waiver to which the federal government recently agreed.

Now the proposal is the hands of the General Assembly, which can make its own revisions before approving a revised fiscal 2009 budget in the coming weeks.

Clearly, Carcieri’s task of balancing the budget came largely at the expense of cities and towns, which stand to lose millions in aid.

The budget proposal would take away all of the $55.1 million in general revenue sharing that had been earmarked to be divvied up among the municipalities. It would also reduce by $4.21 million state aid for the phase-out of the motor-vehicle excise tax.

Another $5.8 million in education aid for professional development would be cut, as would $4.3 million in state aid for school construction.

The Carcieri administration estimated that proposed changes to the state pension system, which also covers local teachers, would save communities a total of $41.1 million in contributions, so Carcieri’s supplemental budget recommended cutting education aid to municipalities by that amount.

Those same pension changes would save the state $30.41 million in contributions for teachers alone, administration officials said.

In total, the $153.89 million reduction in aid represents a 13.5-percent cut from the $1.14 billion set aside for local governments in the $6.89-billion budget for fiscal 2009 that was approved in June. (READ MORE)

While cutting aid to local communities, the supplemental proposal also contained a legislative package intended to relieve cities and town of some costly state mandates and give them more power in labor negotiations.

For instance, one article in Carcieri’s supplemental budget would abolish a law requiring a monitor to be on every school bus carrying students in grade 5 or younger.

Another measure would prohibit teachers from “working to rule,” a move that often happens during contract disputes in which employees do only what is required for them by contract, nothing more.

Other articles attempt to put into motion consolidation efforts, such as creating a statewide school food-services program, a school busing program and a school purchasing program.

In fact, Carcieri said last night that he has proposed creating a new “high-level” commission to study consolidations and regionalization of city and town services, including public education.

News and information from the R.I. Governor’s Office are available at www.governor.ri.gov.