PROVIDENCE –– Smith Hill’s deciders insist they’ve yet to decide anything.

But in as few as four days, the General Assembly will unveil a $7-billion tax-and-spend plan with dramatic implications for Rhode Island’s businesses, thousands of seniors on prescription medication, cash-strapped cities and towns and tens of thousands of retired state employees and teachers.

The Ocean State’s part-time lawmakers are racing toward the end of the 2009 legislative session — most are hoping to adjourn before July — but they’ve yet to approve the year’s most significant piece of legislation: the state budget for the fiscal year that begins July 1.

In a good year, it is a painful process. But this is not a good year. And lawmakers are confronted with perhaps their greatest challenge in recent memory.

They must pass into law a budget that balances a $590-million deficit, roughly 19 percent of state spending.

“Unfortunately, it’s another year, another budget full of difficult choices,” Senate Finance Committee Chairman Daniel DaPonte said during a budget briefing late last week, declining to discuss any proposals in detail. “There’s no agreement.”

The coming 96 hours will feature a flurry of closed-door negotiating sessions among Smith Hill’s elite members, its most influential lobbyists and rank-and-file lawmakers fighting for a voice in a hierarchy that gives most of the power to a select few.

“I think that they’ve decided, pretty much,” said Sen. Rhoda E. Perry, D-Providence, late last week of the Assembly leaders’ budget decisions. “But if there are some really strong objections from enough people on this side, I think there is room for changes.”

And there are strong objections from all sides, even before the details become public.

Businesses have distributed talking points on tax policy. Seniors have signed petitions to save a popular drug program. Anti-tax groups have threatened political consequences. Developmental disabled advocates have flooded to the State House to rally for more money. And union leaders have applied constant pressure to fight looming pension changes.

That’s just in the last week.

Meanwhile, Smith Hill’s power brokers have said virtually nothing publicly about their specific budget proposal, which may be unveiled as early as Friday in the House Finance Committee.

“I’m not going to be commenting on what the governor may or may not be doing over the next few weeks,” said Governor Carcieri’s spokeswoman, Amy Kempe, when asked to detail the governor’s priorities in private negotiating sessions with the legislature.

But there will be few issues more controversial than taxes.

Public budgeting is relatively simple: to close a deficit, lawmakers need to cut state spending, generate more money through taxes or fees, or a combination of the two.

The Republican governor is fighting for a path that favors spending cuts: he has proposed ending a prescription drug program for more than 18,000 low-income seniors, eliminating dental care for 38,000 low-income parents on state-subsidized health care, and cutting 28 pregnant women from the state’s “payer of last resort” health-insurance program, among other things.

Kempe maintains that Carcieri’s plan could have been much worse: “There are no major cuts to social-service programs,” she said.

And even as he proposes cuts, the Republican governor is pushing to phase out Rhode Island’s corporate income tax, a break for businesses that would cost the state government an estimated $14.5 million next year in lost tax revenue.

“The only way you can support and maintain that safety net is by growing revenues,” Kempe said. “Businesses create jobs. And jobs create revenues. If there was ever a time, this is the time to do it to jump-start our economy.”

Few lawmakers in the Democrat-dominated Assembly openly support Carcieri’s tax-cutting plan.

And the lobbying effort by business groups has largely ignored the corporate tax cut, suggesting a more immediate concern that the Assembly may reverse existing tax breaks that favor high earners, such as the alternative flat tax and capital gains.

“There is significant pressure within the General Assembly to raise taxes even higher,” reads a notice recently issued to Rhode Island businesses by the Greater Providence Chamber of Commerce. “Numerous bills are pending in the House and the Senate to increase personal income taxes by freezing or repealing the flat-tax option, a historic reform which has been hailed in the Wall Street Journal, Fortune magazine and other publications ... The General Assembly must resist the temptation to impose new taxes or to increase any existing taxes.”

But freshman Rep. Scott J. Guthrie, D-Coventry, doesn’t agree. In a memo recently circulated to other lawmakers, he argues for repealing the alternative flat tax, or freezing the rate at its current level of 7 percent, proposals that would generate tax revenue of $34.7 million or $12.2 million for the coming year, according to analyses by the governor’s budget office.

“Recouping this money for the state should go a long way in repairing our structural budget deficit,” Guthrie wrote. “While the state is hemorrhaging money and jobs are nowhere to be found, we need to stop giving away the most to those that need it the least.”

His argument resonates among the Senate rank and file, based on comments at last week’s budget briefing.

Elizabeth A. Crowley, D-Central Falls, said the corporate income tax cut is “ludicrous,” given pressure on programs for seniors and other low-income Rhode Islanders. “Let’s not let the elderly have their medicine?” she demanded, in disgust. “I don’t think you need to be cutting the poorest people in the state.”

Senate Fiscal Adviser Peter Marino confirmed that the leadership had been examining existing taxes. “We have been looking at alternatives,” he said. “Capital gains and the flat tax have all been part of the discussion.”

And DaPonte, the Senate finance chairman, suggested that Senate leaders don’t favor cutting programs that serve a large number of people at a relatively low cost. He cited as an example the Rhode Island Pharmaceutical Assistance to the Elderly, which serves 18,469 people and costs the state $1.1 million.

The House leadership has been reluctant to share its thoughts. With a closed-door caucus planned for early this week, House Finance Committee Chairman Steven M. Costantino on Friday said simply that no decisions have been made.

Freshman lawmaker Rep. Peter F. Martin, D-Newport, said he was not aware of the House leadership’s plans. But he knows there are no easy decisions.

“It would be nice if we could come up with a solution to the budget that would at least be understandable to the general public,” he said. “They might not think it’s fair, but at least they’d understand why whatever’s being done is being done. That’s my hope.”

speoples@projo.com