PROVIDENCE — For five hours last night, Rhode Island’s House of Representatives clashed over current-year budget revisions that will touch virtually every citizen.

Lawmakers yelled and screamed. They traded insults. Some risked their political futures.

And by the end of the night, the chamber that largely controls the state budget approved a plan to close a $168-million deficit by scooping millions of dollars from cities and towns, cutting health-care and welfare benefits for thousands of children, and reducing retirement benefits for all state workers who retire after Sept. 30.

Inmates, truck drivers and Training School residents will also be affected by the bill that represents the Assembly’s most significant step toward addressing a fiscal dilemma that has consumed state government and threatens Rhode Island’s economic future.

The final bill approved last night by a 60-to-12 vote –– known as a supplemental budget –– contained 21 separate cost-cutting proposals that reflect months of bargaining between state leaders and labor unions, social welfare advocates and municipalities.

None of them walked away happy last night.

“It’s devastating,” said Dennis Grilli, head of the largest state employees union, Council 94. “All in all, I don’t think we fared very well.”

Labor’s disappointment was met with praise from Governor Carcieri’s office, which applauded the Democrat-dominated Assembly’s decision to avoid raising taxes to help close the massive budget hole.

The supplemental budget “includes the types of difficult but responsible spending decisions necessary to begin the process of getting our finances back on track,” the governor’s spokesman Jeff Neal said. “Most importantly, this revised budget plan resolves this year’s shortfall without raising broad-based taxes.”

The bill now goes to the state Senate. The package could become law by the end of next week.

Last night’s vote, however, was just a first step in the state’s effort to address its worst fiscal challenge in almost two decades. And the debate over taxes –– and far deeper human-service cuts –– is far from over.

Lawmakers must approve a fiscal 2009 budget in the coming months that closes a deficit conservatively estimated at $384 million, but is probably closer to a half-billion dollars, or almost 15 percent of state spending. Fiscal advisers next week will gather to examine the state’s economy, revenues and expenditures to determine the exact size of the hole.

“This is almost just a planning exercise for ’09, when the really difficult decisions must be made,” Rep. Carol A. Mumford, R-Scituate, said of last night’s vote.

Despite the tougher challenges ahead, last night’s debate was far from pleasant.

For more than an hour, legislators traded jabs over a plan to scoop $12.5 million in state aid to cities and towns with just two months left in the fiscal year. Lawmakers acknowledged the issue may have serious political consequences, as the entire Assembly is up for re-election this fall.

“YES IT’S LATE, yes it’s nasty,” House Majority Leader Gordon D. Fox said of the midyear cut. “If it means that some of us may not come back because of this, maybe that’s what needs to happen.”

The fight divided Democrats and even the tiny Republican minority.

Rep. Joseph A. Trillo, R-Warwick, said that municipalities had plenty of warning. “This is a tough vote. Who wants to do this? Nobody. But you know what? It’s necessary.”

Rep. John J. Loughlin, R-Tiverton, disagreed. “You don’t promise cities and towns money and take it back,” he said. “What we tell them, apparently, is worthless.”

The Assembly voted 47 to 25 to approve the local-aid cut.

Dan Beardsley, director of the Rhode Island League of Cities and Towns, watched the debate from the gallery above the rowdy chamber.

“We’ve unfortunately had to resign ourselves to the fact” that the current-year cuts would pass, he said. “I hope my worst fear doesn’t come true, which is that a growing deficit would make them cut [next year’s local aid] deeper.”

There were few surprises last night.

The House voted down a proposal to reduce disability or death benefits for firefighters and police officers or their families. The decision followed an intense lobbying effort by police and fire officials in the previous days. More than 100 gathered on the State House steps earlier in the day.

The House also included compromise language in its plan to reduce retiree health benefits after Sept. 30 — a plan expected to send as many as 2,500 state employees into early retirement.

Under current law, when longtime state workers retire, they pay nothing toward their health-insurance premiums. Others pay as much as 50 percent of the rate the state is charged for an “active” employee. There is no age restriction for collecting subsidized health benefits.

But after Sept. 30, a retiree must be at least 59 and have worked for the state at least 20 years to qualify for the benefit.

The compromise language adopted last night would allow retirees who leave state jobs after Sept. 30 to purchase a modified health-insurance plan at the “active” rate, which is more than $3,000 cheaper than the “retiree” rate, until they turn 65.

MEANWHILE, other proposals approved last night include:

•Cutting state-subsidized health care, known as RIte Care, for more than 2,800 “non-citizen” children. More than 1,250 are in the country legally, while the rest are undocumented. The provision would take effect May 1. Lawmakers plan to include additional money in next year’s budget for community health centers for uninsured immigrant children.

•Another 3,400 low-income children would lose welfare benefits under a plan to cap cash assistance at 60 months. Children were previously exempt from the law that already applied to adults.

•Prison inmates — with the exception of sex offenders and those serving life sentences — could earn extra days off their sentences for good behavior and participation in rehabilitation and treatment programs.

•Capping the population at the state’s Training School at 148 males and 12 females. The Family Court, which controls youth sentences, has consistently opposed the plan.

•Taking $26 million from Rhode Island Housing, the independent state agency that lends money and provides grants for affordable-housing projects.

•Allowing the state and local governments to post notice of rulemaking activities on the Internet, instead of in newspapers.

•Increasing the fines for drivers of all vehicles with more than two axles that cross the Pawtucket River Bridge or the Sakonnet River Bridge. Commercial vehicles that cross the bridges may receive a $3,000 fine for the first offense.

––Katherine Gregg contributed to this report.

speoples@projo.com