PROVIDENCE –– Rhode Island business does not want to be forgotten.

And this week, in a nearly unprecedented show of force, Ocean State business owners ensured they will be remembered as lawmakers struggle to close a state budget deficit that threatens government programs and tax policies that touch almost every Rhode Island citizen.

Dozens of advocates –– bank presidents, yacht builders, inn keepers, and restaurateurs — flocked to the State House on Wednesday to fight proposals to reverse tax cuts for high earners and expand the sales tax to include services ranging from landscaping to health-club memberships.

“I have not seen that type of constituency in many years of my tenure as chairman of House Finance and I believe it was a constituency that needed to be heard,” said Steven M. Costantino, whose committee will decide how to balance a $384-million budget hole in the coming months.

The budget battle, as Costantino describes it, is generally dominated by groups that represent the young, poor, disabled, and state workers.

“It’s a side of the story we don’t hear often,” he said of business owners like Jackie and Wayne McCarthy, the North Kingstown couple who run the Wickford Junction Inn, a bed and breakfast.

“We have thought seriously about moving out of state. We don’t want to do this,” Wayne McCarthy told the House Finance Committee Wednesday night during a hearing that spanned more than five hours and was dominated by the business community.

“We think Rhode Island is worth saving,” added Jackie McCarthy.

Top lawmakers said they sympathized with the McCarthys’ concerns. And leaders in the House and Senate said they do not support key elements of the sweeping tax bill introduced by Rep. Arthur Handy, D-Cranston.

“My job is to work a budget so there are no tax increases,” Costantino said yesterday, acknowledging that holding the line on taxes will mean widespread cuts to social-service programs like welfare and subsidized health care.

Already, Governor Carcieri has proposed cutting health care for more than 2,800 immigrant children and 7,400 adults. A separate proposal cuts welfare benefits for an estimated 3,400 children.

“If there are some of these programs we can’t afford, as tough as a choice as it may be, that may be the situation,” he said.

And while Costantino said he is committed to helping the business community, he could not ensure yesterday that the state budget that ultimately emerges from his committee would not raise taxes.

“It’s a fluid process,” he said. “I am going to try to hold the line on taxes.”

Costantino’s timidity is attributed largely to a growing consensus on Smith Hill that Rhode Island’s financial situation is actually deteriorating.

Fiscal analysts will gather in May to determine the size of the state’s deficit, which was last estimated at $384 million in November. Lawmakers must adopt a balanced budget based on the May revenue forecasts.

“We have May revenues coming and if the world goes into apocalyptic mode –– and it could, with all the trends across the country –– then you have to re-assess,” said House Majority Leader Gordon D. Fox, D-Providence, after professing his opposition to tax increases. “So I don’t want to be bound today knowing we have May revenues coming up and I don’t know where they’re going to be. I reserve the right to be re-asked those questions once we have more information in May.”

Business leaders are aware that the Assembly leadership doesn’t support Handy’s sweeping tax changes. But that didn’t stop them from using the hearing as an opportunity to influence the budget debate that will dominate state affairs over the coming three months.

“It was critical that we got the message across via this bill,” said David Carlin, who coordinated the state Chamber of Commerce Coalition’s effort to mobilize its members this week. “We’re not so concerned that the bill will be enacted as written. What we’re concerned about is that bits and pieces of this bill –– particularly the tax increases –– will be taken and used in the final composition of the ’09 budget.”

Meanwhile, Handy argues that Rhode Island’s tax system disproportionately favors those with higher incomes. His bill would roll back the phaseout of the capital gains and alternative minimum flat taxes, which largely benefit high earners, enacted by the Assembly in 2006. He would issue rebates of up to $600 to property taxpayers and boost education spending.

The legislation also expands the goods and services taxed, including legal and accounting services, expensive clothing and landscaping, among others, while eventually reducing the sales tax rate to 5.5 percent.

State officials are studying the effect of broadening the sales tax and plan to report their findings at the end of the calendar year, too late to influence the fiscal 2009 state budget, which must be adopted by the end of June. Carcieri has said he’s not convinced the proposal would produce any additional revenue for the state.

Meanwhile, John Hazen White Jr., president of Taco Inc., was among the dozens of business leaders to make his voice heard Wednesday.

“If there’s an attempt to solve the issues that this state is confronted with on the back of the taxpayers and the backs of the companies here, we have a serious problem,” he said. “I actually own a home in Florida. I didn’t buy it as a primary residence, never intended to go. I’m a Rhode Islander from Day 1 and intend to be one my whole life. However, I would say that pushed to the certain point where it’s no longer a good idea to be here, I’m gone.”

speoples@projo.com