The plan will probably cause another increase in tuition at the state’s three public colleges, educators say.

The Providence Journal / Steve Szydlowski

PROVIDENCE — Governor Carcieri is seeking to close a massive budget deficit by cutting millions from the state’s public colleges, diverting hundreds of elderly away from nursing homes on a voluntary basis and slashing non-school aid to cities and towns.

The governor’s $6.88-billion budget would also dramatically reduce eligibility for the state’s welfare and subsidized health-care programs, replace hundreds of state employees with private contractors and allow more than 200 prisoners to leave the Adult Correctional Institutions early.

“History will be written about Rhode Island at the beginning of the third millennium as either a tale of struggle and decline or a story of hard work and success,” Carcieri said yesterday. “I intend it to be the latter, and we begin with this budget.”

Facing a deficit estimated by the administration at $384 million, the governor stood by his pledge not to raise taxes, relying heavily instead on spending cuts across state government.

The Republican governor also rolled out a handful of fee increases — including $50 tickets for drivers who talk on hand-held cell phones — but avoided oft-discussed moves to sell the Newport and Mount Hope bridges, privatize thelottery system or expand gambling at the state’s slot parlors.

The release of Caricieri’s budget marks the beginning of a process that will unfold over the next five months as the Democrat-dominated General Assembly debates the spending plan for the fiscal year that begins July 1. Ultimately, legislators have the constitutional power to accept Carcieri’s proposals or not.

Separately, the Assembly hopes to pass a midyear budget revision next month to close a $151-million current-year deficit. That proposal would require all state employees to take six days of unpaid leave before the end of June and includes a midyear $12.7-million cut in state aid for cities and towns.

The immediate reaction from legislative leaders was mixed.

Senate President Joseph Montalbano, D-North Providence, questioned whether the savings that Carcieri projects are “realistic and accurate.”

As long as the numbers are in question, Montalbano said the Senate has to keep an open mind to possible adjustments in two facets of the income tax that primarily affect the wealthy: the new flat-tax rate for high-wage earners and the capital gains tax.

“I think that is still on the table as far as the Senate is concerned,” he said.

House Finance Committee Chairman Steven M. Costantino, D-Providence, said he’s not interested “at this time” in raising any taxes.

“There are some good ideas in this budget,” he said. But he said the inclusion of major spending cuts, including a $67-million Medicaid-cutting plan, without any details is “disappointing” and “alarming.”

The budget, for example, includes $60.6 million in personnel savings that are being discussed with union leaders, according to budget documents. Carcieri’s staff would not elaborate. And labor leaders — already in negotiations regarding furlough days and contracts that expire in July — insist that the governor doesn’t have the legal authority to force concessions.

The governor has also proposed saving more than $66.7 million by reducing Medicaid spending, largely by diverting seniors and disabled adults from nursing homes. The governor says no one would be forced from a nursing home or prevented from entering one, but he needs to divert more than 690 seniors, 300 youths in the child-welfare system and dozens of developmentally disabled people to less-expensive programs to meet his budget targets.

He has not yet spelled out how he would reach his goals. In fact, a one-page budget brief is what the administration calls a “placeholder” for what it promises to introduce later: a comprehensive Medicaid-reform plan.

“I’ve never seen that,” Costantino said.

Overall, the governor’s proposal cuts state spending (not including federal dollars) by $130.9 million (3.8 percent) to $3.27 billion for the year that begins July 1. “Too many special interests view state government as an ATM,” Carcieri said. “As far as I’m concerned, ATM means, ‘all taxpayer money,’ and the taxpayers have had enough.”

And it’s possible that the General Assembly might have to go further. State revenues such as sales and income taxes are directly tied to the health of the economy. A further economic downturn could increase the size of the deficit that must be filled. Fiscal experts will gather in May to revise that estimate.

While there are no new taxes, proposals include higher fees and fines for drivers, telephone customers, released prisoners on probation and elderly enrollees in a wide array of state-subsidized programs.

Those with good driving records would have to pay more to get a violation dismissed. Instead of paying a $25 administrative fee, the driver would have to pay the full cost of the fine attached to the violation, a figure that averages $85, according to a court spokesman.

Telephone customers would pay 7 cents more, instead of the current 26 cents, to help pay for Internet service in schools and libraries. Released prisoners on probation would pay $20 monthly, a $5 bump toward the cost of keeping them under watch.

For the elderly, there would be a new $2 per trip fee for state-provided rides to the doctor, a meal site or what is commonly called “elderly daycare.” Last year alone, the Department of Elderly Affair paid for more than 22,000 such trips.

The elderly also face increases in co-pays for home care and daycare. The minimum $3-an-hour co-pay for home care would go up by $1.50, and the minimum $5.50-a-day co-pay for time spent at a daycare center would also rise by a minimum of $1.50. Those with higher incomes would pay between $2 and $2.50 more.

Other highlights of the budget include:

STATE AID

Rhode Island’s cities and towns would see a $24-million decrease in state aid next year, compared to what they had expected. That news comes just days after the governor proposed that local communities trim about $12.7 million from their current-year budgets between now and July.

A glum Dan Beardsley, director of the Rhode Island League of Cities and Towns, described an earlier budget briefing as “sadder than a wake at Nardolillo’s funeral home.” “The governor is again proposing the same, and in my opinion, outrageous fiscal policy of transferring the state’s fiscal problems to the cities and towns,” he said.

The state’s school districts fared slightly better. Their funding will be frozen at current year levels. That means they’ll get no new money, but they won’t see their aid diminished either.

“I’m a huge supporter of education. I would dearly love to be able to put more money out to our cities and towns for schools. We just can’t do it this year,” Carcieri said.

School officials were less upbeat.

“It’s just doom and gloom,” said Deputy Education Commissioner David V. Abbott.

The winner, if there are any winners this year, is the state’s 11 charter schools, which would see a $2.8-million increase for a total of $29.8 million. That growth will allow several of the schools to increase enrollment and add grades.

The school breakfast program did not fare as well. The governor’s budget calls for eliminating state funds for the program. The food itself will still be paid for by the federal government as will some of the operating expenses, but without state subsidies for the administrative costs, school officials said it would be hard for some districts to continue the program.

HIGHER EDUCATION

Faced with $17.1 million in cuts, higher education officials say recently approved tuition hikes of at least 6 percent for next year will no longer be enough.

The governor’s plan will all but guarantee “a serious double-digit” increase in tuition at the state’s three public colleges.

“By that I mean [a total hike] in the 12-  13-percent increase range,” an unprecedented scenario for the board, said Higher Education Commissioner Jack R. Warner.

Further, the governor told the state’s Higher Education Assistance Authority to cut more than $1 million in need-based scholarships administered through the Rhode Island State Grant Program.

That department says it hasn’t yet figured out if it will achieve the savings by cutting the number of scholarships it gives out or reducing the average award of $1,117.

“This is going to present serious problems for students and families,” Warner said.

PERSONNEL

The governor is pushing forward with his plan to lay off at least 583 state employees and cut 193 private contractors. The budget projects around $50 million in savings from those reductions. And he has budgeted $60.6 million in further savings from “compensation, medical plan design and co-share changes” for those state workers who remain.

But his budget documents note that $8 million of the savings would be offset by the governor’s plans to hire hundreds of private contract workers to replace the state employees.

Privatization plays a key role in Carcieri’s spending plan. He wants to privatize functions such as dietary, housekeeping and janitorial services at Eleanor Slater Hospital, the state Veteran’s Home, the Davies and deaf schools, and dentists and inmate counselors at the ACI.

Privatization has been a hot topic on Smith Hill, as the Assembly passed a law aimed at tightening the governor’s ability to do so. Carcieri’s staff has repeatedly said the law blocks any privatization efforts and has asked lawmakers to reverse the law.

“It appears that they’re challenging the law. That concerns me,” said Sen. Paul E. Moura, D-East Providence.

CORRECTIONS

As expected, the governor has re-introduced a series of “good-time” provisions that would allow hundreds of prisoners to leave the ACI early.

First unveiled last month, the plan would give well-behaved prisoners, with the exception of sexual offenders, the chance to slice 10 days per month off their sentences. Corrections Director A.T. Wall said the early-release plan, if enacted as legislation, will reduce the daily prison population by 47 prisoners on average between April 1 and July 1 and by about 211 next year.

While there will be some startup costs associated with the change, corrections officials estimate the new policy will save more than $1 million next year and a potential $22 million over 10 years.

HUMAN SERVICES

Overall, the Carcieri plan assumes $137 million in state and federal Medicaid spending cuts, many of which would require the approval of the federal Centers for Medicare and Medicaid Services.

Department of Human Services Director Gary Alexander said $66.7 million in savings is predicated in part on reducing the overall number of Medicaid patients in private nursing homes next year by 690. That assumes 125 leave voluntarily and 565 are diverted to other services, such as home care. The average number today: 6,500.

The budget also would cut eligibility for the state’s subsidized healthcare program, RIte Care, for parents with incomes from 185 percent of the federal poverty level ($32,560 for a family of three) to 133 percent ($23,408 for a family of three). An estimated 7,396 adults would be affected. The governor also wants to cut eligibility for the state’s welfare program, known as the Family Independence Program, from five years to two years, although the change wouldn’t be enforced until July 2009.

And community service agencies also stand to lose substantial funds: Head Start ($3.3 million), Rhode Island Meals on Wheels ($201,400), Crossroads Rhode Island ($225,000) and Rhode Island Community Food Bank ($192,000).

The governor proposed for the second year in a row eliminating all funding for the state’s Neighborhood Opportunities Program, which helps finance affordable housing for those who make less than $30,000 a year.

And the budget calls for the closing of the West Warwick branch of the Division of Motor Vehicles.

Budget cuts and savings

Medicaid:

Divert elderly and disabled from institutions to alternative programs.

Savings: $67 million

State employees:

Unspecified wage and benefit cuts.

Savings: $60.6 million

RIte Care:

Lower income eligibility to cut 7,000 adults.

Savings: $12.8 million

Welfare:

Cut eligibility from 5 years to 2 years.

Savings: expected for 2010.

Prison:

Enhance “good time” provisions to reduce inmate population.

Savings: $1 million

cneedham@projo.com