PROVIDENCE — Mark these words, because legislative leaders say you are going to hear more about them during the 2007-08 General Assembly session that opens for business on Tuesday:

Sales tax rollback. Quonset Point development. New prison sentencing guidelines. And possibly, years after it was first proposed: a statewide teachers contract.

But for the most part, expect more talk than action.

The key phrase is likely to be: That needs further study.

And good news, bad news – depending on your perspective — Assembly leaders say they won’t talk about a casino in 2007 , not after the thumping the $17.8-million Harrah’s-financed, Narragansett Indian casino drive got in November.

But even that comes with a caveat: if Massachusetts lawmakers put slots at the Bay State’s tracks, then “maybe we’ll have to come back to the issue,” says House Speaker William J. Murphy, D-West Warwick.

But some issues demand attention, including a soaring inmate population at the state prison that has led the lawyers in top leadership positions in the General Assembly to talk, with some urgency, about the need to provide alternatives to jail for certain repeat offenders, such as drug addicts, who get arrested time and again.

“That person is crying out for help,” says Murphy, a criminal defense lawyer who is suggesting the state’s lawmakers and judges craft “a plan where that person can be in the community and get the help that he or she needs.”

The coming legislative year — like just about every other one — begins with dire financial warnings about multimillion-dollar budget deficits, rocky times ahead and potentially severe cutbacks in state government services. The state police warn of layoffs; prison administrators talk about the need to release hundreds of “low-risk” convicts into the community; state hospital administrators talk about shutting down hospital wards or an entire network of state-run group homes for the developmentally disabled.

The state is facing a potential $105.1-million shortfall in the $6-billion current-year budget, and a potential $254-million gap between anticipated revenues and spending in the fiscal year that begins July 1.

So the stage is set for another end-of-session tussle over the cost-cutting plans Republican Governor Carcieri submits in three weeks to the General Assembly, where Democrats outnumber Republicans 33-5 in the Senate, 62-13 in the House.

Lawmakers blame Carcieri’s administration for overspending; the governor blames lawmakers for denying him the “tools” he needs to cut the state workforce.

House Republican leader Robert A. Watson blames RIte Care, the state’s health-insurance subsidy program for those often called the “working poor” for making Rhode Island “a magnet” for welfare-seekers from other states.

Heading into the new session, Watson, embattled within his own tiny GOP ranks, had this question for the Democratic leaders: “Do they recognize the premise that we are a welfare magnet state and if they do, do they have any plans to address that issue?”

Murphy’s response to Watson’s pre-session prodding: “This year we are not going to have money fall from the sky so we have to review everything and make some tough decisions.”

Advocates for low-income Rhode Islanders are gearing up for a fight against what they fear will be “a wholesale campaign” by Carcieri, “against kids, the elderly and the disabled, our most vulnerable residents,” according to Ocean State Action executive director Karen Malcolm.

After months on the campaign trail, Assembly leaders — and the newly reelected governor — seem to have modest ambitions for the ’07 session, which they each, in turn, described as an opportunity to step back and study some big issues, such as education financing, while bird-dogging the implementation of legislation they passed last session , such as their much heralded — but work-in-progress — effort to provide health-insurance relief for small business.

“Sometimes making sure that the programs we have are working is better than creating new programs,” said Senate Majority Leader M. Teresa Paiva Weed.

Carcieri echoed: “There’s not a whole lot of things we see sitting here right now that I want to get done that are going to require new pieces of legislation.”

Nonetheless, here is a preview of some of the issues that may keep the state’s part-time legislators busy this session.

SALES TAXES:

The governor and Assembly leaders expect to at least consider changing the state’s sales tax.

Currently, Rhode Island taxes goods at 7 percent but has exempted many items, including clothing and food, from the tax. Carcieri wants to study the impact of lowering the tax to Massachusetts’ 5-percent level, but applying the tax to more items.

“This is not about increasing taxes. It’s about making us on parity with Massachusetts,” Carcieri said. “There’s no question that that disparity has spawned a lot of retail development just across the border.”

For instance, Rhode Island doesn’t tax groceries, passing up $130 million in sales tax a year, according to estimates by the Division of Taxation. Change is probably unlikely since Massachusetts also doesn’t tax most groceries.

Rhode Island doesn’t tax clothing and shoe sales, forgoing a potential $90 million a year. Massachusetts only exempts the first $175 of an item’s cost and Connecticut, the first $50.

Some of the other things Rhode Island exempts from the sales tax include medicine and drugs, at an estimated cost to the state of $24.3 million in lost revenue; newspapers (revenue loss: $5.7 million); and coffins (revenue loss: $2.4 million).

Senate President Joseph A. Montalbano is not enthused about tinkering with the sales tax. “That’s a perennial that usually has turned out to be less than promising.”

With sales tax collections this year lagging expectations, House Finance Committee chairman Steven M. Costantino said, House leaders are also keenly interested in looking anew at what they can do to recapture shoppers drifting over to Massachusetts.

Allowing Sunday automobile sales is one option debated last session that will probably be revived for discussion in light of what Costantino, D-Providence, describes as an “extremely aggressive campaign” by Massachusetts auto dealers for Rhode Islanders’ cross-border business.

Additionally, the Senate’s Paiva Weed said a tax on luxury items is “certainly something we’d be open to.”

But Gary S. Sasse, executive director of the Rhode Island Public Expenditure Council, a business-financed research group, raises this question: “Do you do it and earmark the funds to buy something, such as a [new] foundation school-aid formula, or do you do it simply to balance the budget, which is just more tax and spend.”

EDUCATION FUNDING:

Lawmakers dole out more than $699 million in school aid to their home cities and towns, but it has been years since the state had a fixed formula for determining who gets what.

Since school costs are a major component of local property taxes, House Majority Leader Gordon D. Fox said, there has to be a discussion of “what is adequate funding of education.”

Fueling the discussion will be a legislative study commission’s report on education financing, due March 1.

Fox expects it “will come with a high number of what you need per pupil to adequately educate a student,” and that will force discussion about a whole array of cost-saving issues “that people sort of whisper about, but really haven’t wrapped their arms around and tackled.” He cites as an example: how much can be saved by “regionalizing or centralizing” school purchasing.

“I don’t think you are going to see anything substantive coming this year based upon the timing of the report,” but “I think there is going to be enough information generated … where we will be remiss if we don’t begin those discussions.”

Does that mean the lawmakers are open to discussion about a single statewide teachers contact? “Absolutely.” A single health insurance contract? “Absolutely.” A further consolidation of school districts? “Absolutely,” Fox said.

Montalbano and Paiva Weed agreed it might be difficult to implement changes in the same year the report comes out, but they expect it to lead to action by 2008.

Asked about a statewide teacher contract, statewide health insurance contract for teachers and consolidation of school districts, they didn’t close the door, but Paiva Weed said, “Generally speaking, the executive branch has taken the lead on those issues.”

For his part, Carcieri also wants to continue to focus on education – but don’t expect him to head to lawmakers for much in that area. Instead, he plans to push officials at the Department of Education to implement more changes through their own rule-making procedures to – among other things – improve English skills, especially in the urban school districts.

He also envisions a closer link between the Providence, Pawtucket and Central Falls school districts. Last session, he proposed and lawmakers rejected, a combined district. This time, the governor says, he wants “some type of cooperation.”

“Let me put it that way,” Carcieri said, “because when you talk about consolidation everybody gets nervous. But clearly the state’s got the biggest stake in all of those systems.”

But when it comes to consolidation, Montalbano, whose district includes a slice of Pawtucket, said: “I don’t see that happening this year.” Those districts “have very difficult populations to begin with,” he said.

ETHICS:

With a dwindling number of Republicans in the General Assembly, and increased unity among Democrats, Governor Carcieri’s likelihood of sustaining a veto is lower than it’s ever been.

Thus, he appears geared to work around the Assembly wherever possible.

He has vowed, for example, to follow through on a plan, announced during his reelection campaign, to require lawmakers to name their professional clients. While lawmakers are already required to name their employers, an insurance broker or a lawyer might have clients with business before the General Assembly, and the public has no way of knowing who the clients are.

Anticipating that the Assembly would balk at forcing its own members to name clients, Carcieri proposed enacting this change and others through revising the state Ethics Code, a prerogative of the Ethics Commission, not the Assembly.

Given the number of conflict-of-interest complaints flung at lawmakers, Murphy again suggests lawmakers instead look seriously at making themselves over into a full-time General Assembly.

Lawmakers get $13,089 a year – leaders get twice that – plus 100 percent state-paid health insurance. They meet three nights a week, for about six months a year. Most have day jobs as lawyers, teachers, police officers and private business owners. The move to a full-time Assembly would force Murphy himself to choose between the State House and his own busy law practice. But given “the complicated issues facing us” and the vulnerability of lawmakers to complaints he said: “It’s an issue I think we have to have discussion on.”

Carcieri “does not see what the advantage of a full-time legislature would be” and he “does not believe that separating your legislative business from your personal financial interests is impossible,” said spokesman Jeff Neal.

“He believes that is the obligation of every elected official and if you can’t do that, you shouldn’t run for public office,” Neal said. PRISON SENTENCING:

The state prison population reached its highest level ever a few weeks back, with 3,821 inmates.

The director of the state Department of Corrections has suggested legislative changes in sentencing so that some people “who would otherwise be sent to prison are instead supervised through home confinement, probation or other means.”

The lawmakers are talking about “treatment,” instead of prison. Montalbano and Paiva Weed said the state needs to increase space in substance-abuse and mental-illness treatment facilities. They said 74 people currently in prison could be treated in such facilities if beds became available.

“The simplest thing to do is to build more prisons,” Paiva Weed said. But the goal, Montalbano said, “is not to warehouse people.”

When asked if he was interested in ridding state law of minimum sentences, Murphy said: “No, we haven’t said that. I don’t want to say that we are unlocking the prison and letting everybody go back home.” (Of his own clients, he laughed and said: “Hopefully, I do a good enough job that they don’t end up there.”)

But, he too said: “You get a young person who’s got a drug problem, a dependency problem, and if they have three or four arrests for possession, they end up in Cranston, and that person might be better suited for an alternative.” .

GAY MARRIAGE:

A recent Massachusetts court decision said town clerks in that state must issue marriage licenses to same-sex couples who live in Rhode Island, because same-sex marriage is legal in Massachusetts and Rhode Island law does not expressly prohibit it. That could make the issue ripe for action in the Assembly, said Jenn Steinfeld, cochair of Marriage Equality Rhode Island.

Additionally, New Jersey’s legislature just legalized civil unions for same-sex couples. However, some states have also adopted so-called “defense of marriage” acts, which explicitly ban gay marriage by defining marriage as being between a man and a woman.

“There are a number of new representatives and senators who we don’t have positions [on same-sex marriage] for. We don’t know where they stand,” Steinfeld said. “Certainly we think that with each passing year the climate towards marriage equality improves.”

But Murphy and Montabano have long opposed same-sex marriage and indicated that the issue is not a priority for them.

ELECTIONS:

Besides separation of powers, one of the issues Common Cause intends to push is full public financing of elections.

Rhode Island currently has a partial system, in which the state provides taxpayer money to match private donations the candidates raise. In return for the public money, candidates agree to spending limits.

In states that implemented full public financing, such as Maine and Arizona, elected officials report feeling freer to act according to conscience and the interests of constituents, rather than the interests of campaign contributors, said Common Cause director Christine Lopes.

A full public financing bill has been filed the last two years and has never made it out of committee. Leaders remain skeptical.

“I have a lot of questions about whether the voters would support complete public financing of campaigns,” Paiva Weed said.

SEPARATION OF POWERS:

Lawmakers have yet to agree on the membership of all of the state’s boards and commissions they were forced to reshape after voters two years ago approved the separation of powers constitutional amendment forcing them and their representatives off the bodies.

The most prominent of those boards yet to be addressed is the Coastal Resources Management Council. Expect to see some disagreement over whether mayors can appoint members of boards, or whether only the governor can wield that power. “My position has been that the City of Providence deserves to have representations on boards and commissions that so deeply affect them,” Paiva Weed said.

Montalbano and Paiva Weed said they plan to focus on their new responsibilities overseeing these commissions. The Senate has already begun sending staff to board meetings, but the leaders say they don’t have enough staff now for proper oversight. Montalbano said he hopes to hire more employees to help with that role.