PROVIDENCE — The state House of Representatives has restored most of a proposed 50-percent cut in funding to the Rhode Island Economic Development Corporation.

As part of its vote early Thursday morning in favor of a $7.76-billion state budget for the fiscal year that starts July 1, the House approved $4.65 million in funding for the EDC, $2 million more than a powerful House committee proposed last week.

The funding, although higher than the House Finance Committee initially planned, is still 12 percent less than the EDC’s current $5.3-million budget, according to the agency.

EDC interim executive director J. Michael Saul expressed gratitude to the legislature for restoring the funds and to Governor Carcieri’s office for lobbying on behalf of his agency.

He acknowledged legislators’ “difficult work of developing a budget that supports business and economic growth,” singling out by name House Speaker William Murphy, Majority Leader Gordon Fox and Finance Committee chairman Steven Costantino.

“Now, more than ever, we need to invest in economic development for the state of Rhode Island,” Saul said in a statement released Thursday. “This restoration will ensure that RIEDC can continue to focus on its mission to create jobs, help companies expand and develop Rhode Island’s work force.”

The House Finance Committee voted June 17 in favor of a budget that would have cut the EDC’s budget in half to $2.65 million. No explanation was provided for the deep reduction.

It was just the latest blow to the state agency, which has come under fire for allegedly not doing enough to generate new jobs in a state with a jobless rate of 12.1 percent, the third-highest in the nation. A special review panel in April called the EDC ineffective and recommended fresh leadership.

After a meeting of the EDC board on Monday at which the budget issue was only briefly discussed, Saul said that the governor’s office was handling all efforts to get the funding restored. Saul could not be reached for further comment Thursday.

The Senate was set to vote on the budget Thursday evening and was not expected to make any changes.

akuffner@projo.com