Governor Carcieri speaks to the media after his broadcast on live television last night.

The Providence Journal / Ruben W. Perez

PROVIDENCE — A cigarette tax hike, more than $74 million in municipal and education aid cuts and a rollback in pension benefits for state workers and teachers who retire after April 1 are key pieces in Governor Carcieri’s proposal for averting a potential $357.4-million current-year deficit.

The deficit-avoidance plan he unveiled during a televised address from his office last night was a patchwork of tax and fee increases, spending cuts and one-time revenue boosters, such as the sale of three state-owned properties — including a Cranston parcel eyed as the new home of the state motor-vehicle registry — to Rhode Island Housing for a quick infusion of cash. He is also banking on $27.5 million in Medicaid bonus money from the Obama administration.

“Tonight, I’ve taken the unprecedented step of speaking to you directly, because we are facing extraordinary circumstances,” Carcieri said in a 7 p.m. address from his office, broadcast live on local television and radio.

“I know there are some out there who believe we need to increase taxes to solve this budget problem. I am firmly convinced that raising broad-based sales or income taxes would be disastrous for our state’s future — it will merely prolong the economic decline, hasten job losses and hurt more of our families.”

Reaction to the Republican governor’s plan was swift and, in some cases, negative.

“The state doesn’t want to raise taxes to bail itself out of its deficit hole, but it is willing to eliminate aid to cities and towns that was designed to lessen Rhode Island’s overreliance on local property taxes,” said Dan Beardsley, executive director of the Rhode Island League of Cities and Towns.

“We’ve been responsible, we’ve been prudent with our money so that we’ve been able to post surpluses,” said Republican Warwick Mayor Scott Avedisian, whose city, the state’s second-largest, faces a reduction of at least $4.8 million. “The governor is penalizing cities and towns for doing a good job.”

“This is grossly unfair and totally unacceptable,” declared `Johnston Mayor Joseph M. Polisena.

Among the highlights of the governor’s deficit - avoidance plan:

•A $1 hike in the state’s $2.46-a-pack cigarette tax that would make the Rhode Island tax the highest in the nation. But the increase would not necessarily make the cost of a pack of cigarettes here any more expensive than it would be in Massachusetts because of the proposed repeal of a minimum markup requirement here that currently adds to the cost.

Even with the tax hike, state officials say, a pack of brand-name cigarettes would sell for an estimated $6.67 here, compared with $7.12 in Massachusetts.

•The doubling of motor-vehicle title fees to $50, with even steeper increases from $75 to $250 in the cost of reinstating a suspended license.

•A cutback in state aid to the 39 cities and towns, including the withholding of $55 million in promised revenue-sharing funds, and a potential $19.6 million in anticipated school aid. Though it appears he is also cutting $40 million in state reimbursements for pension costs, Carcieri is proposing to trim those costs by an equal amount.

•A delay in the payment of a proposed $10-million settlement with the victims of the 2003 Station nightclub fire.

•The imposition of a minimum retirement age — 59 — and the elimination of automatic annual cost-of-living increases to future municipal and state retirees, including judges and state police, who leave after April 1. In addition, the state would slash its contributions to the pension fund by 75 percent during the final months of this year. Carcieri also hinted at future plans to shift the state from a defined-benefit pension to a government-version of the 401(k) retirement plans common in private industry for new employees.

Current rules allow all but the newest state employees to retire at any age after 28 years service, or at age 60 with at least 10 years service. Municipal employees enrolled in the state-retirement system can currently retire with a pension at age 58.

“Even with these changes, state and municipal employees and teachers will still enjoy an extremely competitive retirement package that rivals the best in the private sector,” Carcieri said. “For example, at age 59, and after 35 years of service, they will still receive a pension of 75 percent to 80 percent of their salary. In addition, they will receive health insurance with a 20 percent co-pay. Many of you watching tonight don’t have retiree health care provided by your former employer.”

On the local aid front, the governor acknowledged that taxpayers are already reeling under the weight of local property taxes that rank seventh-highest in the country, making mid-year state aid cuts that much more difficult for communities.

But Carcieri laid out a plan to “help our municipalities reduce spending.”

He wants, for example, to require cities and towns and local school districts to sign on to statewide health, food service and transportation contracts, and impose minimum 25 percent “co-sharing” by their employees on the cost of the health coverage. He has also proposed eliminating bus monitors for elementary school buses; no longer requiring school nurses to be certified as teachers; and imposing financial penalties for teachers who go out on an illegal strike.

Relief from mandates will be the only silver lining, said Providence Mayor David N. Cicilline.

But those are long-term solutions. “I have absolutely no idea how some communities are going to make it until June,” Beardsley said. Some may raise taxes. Elsewhere, local leaders “will have to force communities to live with these cuts. What’s that going to mean? [Things like] garbage collection every other week instead of every week. It means that Fourth of July celebrations are going to be eliminated, and senior citizens programs are going to see a reduction.”

School officials, too, say they will have trouble making it through the end of the fiscal year in June.

If the legislature agrees to the governor’s plan, school departments will lose $4.3 million they were promised from the expansion of weekend gambling at Twin River and $5.8 million for “professional development.” Some districts have already spent the development money, so they will have to consider layoffs to keep the budget in the black, said Coventry Supt. Kenneth R. DiPietro, head of the Rhode Island School Superintendents Association.

And since state law prevents teachers from being laid off mid-year, “The only things you can change substantially in the middle of the year are support staff, like teaching assistants and custodians,” DiPietro said.

And those were among Carcieri’s more obvious proposals.

Buried within the piles of paper are less obvious attempts to cut the numbers of people enrolled in state-subsidized health care: “customize” the health benefits available to this low-income population, steer the elderly away from nursing homes and create a preferred pharmacy list.

For example, one proposal would impose a new $10,000 “liquid resource test” for the 41,000 adults currently enrolled in the state-subsidized health insurance program known as RIte Care, which would effectively eliminate anyone who owns a home and a car.

Department of Human Services Director Gary Alexander said his agency has “found that there are some adults who own a nice home, have a car... [who] don’t want to go to work.” Alexander said the new resource test is aimed at rooting them out.

“Let me be very clear,” said Carcieri, “we will not remove anyone from a nursing home unless they choose to be moved.”

But to produce its share of the promised savings, Alexander said his agency will need to steer 196 people away from nursing homes and assisted-living facilities to less expensive alternatives over the next six months, or cut short their stays.

Democratic legislative leaders said they were only partially briefed on the budget, in short conversations with Carcieri — not state budget officials — yesterday morning. “He talked in broad streams, but I didn’t even leave there with a piece of paper,” said House Majority Leader Gordon D. Fox.

Tim Duffy, executive director of the Rhode Island Association of School Committees, called the proposed April 1 trigger for pension cutbacks a prescription for trouble. Estimating as many as half the teachers in this state could qualify to retire, he said: “If they all go at once, 10 weeks before the school year ends, it’s going to create a chaotic scene.”

State AFL-CIO Secretary Treasurer George Nee said both the pension and benefit reductions caught the state’s labor unions by surprise.

“We are very disappointed that it appears that the governor is using the supplemental budget crisis as an excuse to violate the long held principals of vesting,” Nee said. “We know that in tough economic times there is a need for unions to step up to the plate, but … to use this to subvert the collective bargaining process is unacceptable.”

But Carcieri got a thumbs-up from one of the Democrats hoping to replace him in two years, state Treasurer Frank Caprio, who said: “The budget correctly focuses on reductions in spending and not raising taxes. Rhode Islanders are taxed enough.”

Carcieri’s mid-year budget-repair bill would increase Rhode Island’s $6.9-billion state and federally financed budget by an overall $62 million reflecting, in part, a spike in unemployment benefit payments.

—With reports from Philip Marcelo and Jennifer Jordan

cneedham@projo.com