/ Tom Murphy

Last spring Narragansett Town Manager Jeffry Ceasrine prepared a $21.4-million town budget that assumed the state would be contributing about $2 million.

Seven months into the fiscal year, Ceasrine is waiting to see how much of that money — approved by the General Assembly — will actually come through.

He’s not alone. A state budget gap projected to be as high as $450 million for the coming year has cities and towns braced for cuts in aid, if not this year, then next year.

While cities such as Providence, Cranston and Warwick stand to lose the most in terms of sheer dollars, officials in some South County towns say the cuts could strain already tight budgets, delay capital improvement projects and, in Richmond and Hopkinton, aggravate budget difficulties that loom for the coming year.

In Narragansett, Ceasrine is looking to cut unnecessary expenses — purchases and filling vacant positions, for example — to offset what could be a loss of $159,706 this year.

But he was confident the town will end the fiscal year in the black.

“We can survive without this $159,000,” he said.

The mood was different in Richmond, where this year’s budget has little room for error and next year’s proposed Chariho Regional School District budget puts the town above the state cap on tax levy increases before cuts to state municipal aid and possible cuts to state school aid — not to mention rising costs for municipal departments — are even counted.

Under the state cap, Richmond’s $12.5-million tax levy can rise by 5 percent, or $625,151, yet the proposed Chariho budget seeks an additional $812,955. Another Chariho town, Hopkinton, faces similar a similar dilemma. Hopkinton’s $15.1-million levy can rise by $755,213, yet the proposed Chariho budget seeks an additional $736,150, leaving $19,063 to cover cost increases in municipal departments.

Chariho officials say they are looking to trim next year’s proposed budget, but in the meantime Hopkinton Town Manager William A. DiLibero said the possible cuts in state aid, along with rising Chariho costs and the cap on levy increases, leave him no choice but to look for reductions in next year’s town budget.

DiLibero said he is looking at all options, including reducing employee hours, reducing hours at Town Hall and asking unions to forgo contractual raises.

“It really comes down to what the numbers are that we have to meet and how do we get there,” he said.

THE LOCAL AID cuts, proposed by Governor Carcieri, would reduce general revenue sharing aid by about 15 percent, or $10 million statewide, and reduce motor vehicle excise tax phase-out reimbursements by 2 percent, or $2.7 million statewide.

In both cases, the cuts would affect the current fiscal year, which began July 1 and ends June 30.

For South County towns, the cuts would range from a high of $199,337 in South Kingstown to a low of $15,734 on Block Island.

The cuts are not a sure thing. Both need General Assembly approval, and while several local lawmakers agreed that cutting local aid to close the state budget deficit is an option, not all supported the idea of a midyear reduction.

“I don’t necessarily, philosophically, agree with his making cuts in moneys that cities and towns have come to effectively rely on as money in the bank,” said Sen. James C. Sheehan, D-North Kingstown.

But with this year’s state budget facing a projected $131-million shortfall, Rep. John P. Shanley Jr., D-South Kingstown, said there may be no alternative.

“I might disagree with how it’s being done or whatever, but I can’t disagree with the bottom line,” said Shanley, a member of the House Finance Committee.

The cuts are being discussed against a backdrop of uncertainty about state aid to schools, which was level-funded this year and will be level-funded at best next year, lawmakers and the governor’s office have said.

If state aid to towns or state aid to schools is cut, the reduction would come as cities and towns face an ever-tighter cap on tax levy increases. This year, the cap was 5.25 percent. Next year, it is 5 percent. The following year, it will be 4.75 percent.

The cap was adopted two years ago in a bill, known as “3050,” which also called for the state to gradually pay a greater share of local school costs.

As local officials often point out, that hasn’t happened.

“There’s no question that a reduction in state aid reverses the trend which 3050 was premised upon, which was reversing the trend of property tax burdens,” said Jamestown Town Administrator Bruce R. Keiser.

MOST LOCAL TOWN managers and administrators said the proposed current-year cuts would make them rethink some expenses.

In South Kingstown, Town Manager Stephen A. Alfred said he is looking for areas to cut and talked of possible delays in capital projects for which the town has been saving money, including improvements at Town Hall and an expansion of an adult daycare program.

Westerly Town Manager Joseph T. Turo said his budget is in good shape because he anticipated a possible cut in aid and told department heads to level-fund their budgets, where possible.

“We knew this was going to be a difficult year,” he said.

But managers agreed that a cut in aid this year, followed by cuts next year, would have long-term impacts as towns either reduce costs or dip into reserve funds that would need to be replenished.

“This has serious implications to the towns,” Alfred said. “The full measure and impact on municipal government of this mid-year adjustment will not really be known until we see what the impact is on the ’08-09 year and what the General Assembly does.”

ONLY ONE SUGGESTION from the governor — that of having cities and towns begin their fiscal years in October, rather than July — drew positive responses.

Keiser and DiLibero said the change would help because the state’s budget year also runs July to June, which means cities and towns often don’t know how much aid they will receive until after they adopt their budgets. If towns were on a later cycle, they would know how much to expect.

But not everyone liked the idea.

Alfred, who has been South Kingstown’s manager for more than 30 years, said the change would move the budget process to a time of year when many residents are away.

A better idea, he said, would be for the state to move its fiscal year up by a few months.

Alfred also reacted coolly to suggestions that cities and towns, like the state, need to do some belt tightening.

“Many of the costs associated with running government are based on collective bargaining laws that are set by the General Assembly, or pension laws that are set by the General Assembly,” he said.

“If people want us to tighten our belts, they need to provide us with the tools.”

In Richmond, Town Council member Henry R. Oppenheimer said belt tightening by the town is not the way to fix next year’s budget.

For the town to cut enough money to stay under the state cap, town programs would have to be decimated, he said.

Oppenheimer said the answer is a $1-million reduction in Chariho’s proposed budget, which would keep Richmond under the state cap and leave room for modest increases in municipal departments, assuming any cuts in state aid are not too deep.

With reports from Journal staff writers Maria Armental, Paul Davis, Katie Mulvaney and Donita Naylor.

redgar@projo.com