PROVIDENCE — It’s an annual rite: the governor comes out with his budget and groups from across the state start a months-long campaign against cuts affecting them.

Representatives Gregory Schadone, D-North Providence, left, and Raymond Church, D-North Smithfield, exchange ideas after everyone else had left the House chamber at day’s end yesterday.

The Providence Journal / Connie Grosch

That protest march started as soon as the budget was unveiled Wednesday and picked up momentum yesterday, with city and town leaders, advocates for the poor and state worker unions speaking out against the ways Governor Carcieri chose to balance his $7-billion budget.

The state’s 39 cities and towns might face cutbacks in their services after Carcieri decided to keep general state aid at its current levels, warned Dan Beardsley, executive director of the Rhode Island League of Cities and Towns.

This year will be particularly tough, he said, because of a new state law limiting how much communities can increase their tax levy. Beardsley said municipalities were already struggling to balance their budgets before learning about the aid freeze.

“I’m gravely concerned,” he said. “Local officials have expressed a real concern about maintaining existing … services.”

Like many others, Beardsley said he does not expect the General Assembly to increase funding for his constituents.

“Help,” he said. “It’s going to be one of those years.”

House Finance Chairman Steven M. Costantino, D-Providence, said that lawmakers might have to go along with most of the cuts “because we are limited with our choices.” He even suggested that the Assembly might have to make deeper cuts.

Carcieri’s spokesman, Jeff Neal, said the $360-million deficit was the largest budget problem the governor has ever faced.

“There is no doubt that there are a number of groups that will not be happy with some of these difficult choices, but to the extent that we do not ask for sacrifices from one group, other groups must be asked to take up even more of the burden,” Neal said. “What the governor tried to do was spread the sacrifices as evenly as possible among the many interests.”

While some groups said the governor is disproportionately targeting them, J. Michael Downey, president of Council 94 of the American Federation of State, County and Municipal Employees, called his actions “absolutely illegal.”

The governor plans to shut down state government for seven days in the next few months.

“To me, that would be a lockout, not allowing us to go to our jobs,” Downey said.

He said he tried to talk with the administration about employees voluntarily taking time off without pay, but was told: “Not allowed. We can’t do that.”

He also took umbrage at the incongruity of the administration proposing big raises for several high-level staffers last week and this week proposing to lay off 168 employees and eliminate another 214 jobs by outsourcing housekeeping and food services at the state hospital and the veterans home.

“I just don’t think that set the right tone for me or the people I represent that we would hand out lavish raises for department heads and then want to send home cooks’ helpers, janitors and cleaners out of the veterans home and the medical center,” Downey said.

Gary S. Sasse, executive director of the Rhode Island Public Expenditure Council, a business-backed policy group, said he is concerned about the budget’s impact for future years. The state projects a $379-million deficit for the fiscal year starting July 1, 2008.

“What it essentially means for next year: same time, same place,” he said.

Sasse said this budget “may only represent a down payment on the tough choices that are necessary to close Rhode Island’s structural budget gap.”

He also criticized the governor for tapping into the state’s rainy day fund to create an artificial surplus at the start of next year — essentially an accounting trick.

“It’s an accounting device to balance the ’08 budget without making some of the tough choices to fix the underlying issue,” Sasse said.

Along that note, Lt. Gov. Elizabeth H. Roberts said that challenging budgets provide an opportunity for real change.

“What disappoints me in this is how little actual structural reform there is. I anticipate looking at particularly the one-time fixes that next year we will have comparable challenges if not greater,” Roberts, a Democrat, said.

One of those fixes is to grab $15 million from the reserve funds of the state’s insurers.

Kim Keough, spokeswoman for Blue Cross & Blue Shield of Rhode Island, noted that the state commissioned a study last year to determine the appropriate range for the company’s reserves. Right now, Blue Cross is below that range.

“Anything that would inhibit our ability to get into that appropriate range, which was defined by the state, would cause us concern,” she said.

Granted, all of this is likely to change somehow as lawmakers work until June or July to finish the budget. Even Carcieri’s staff notes there will be change.

In a memo to union officials this week, Carcieri’s director of administration, Beverly E. Najarian, called the budget “very much a ‘work in progress’ as we struggle to deal with the looming fiscal crisis.”

With reports from Katherine Gregg of the Journal State House Bureau

smayerow@projo.com