House Majority Leader Gordon Fox, center, addresses questions from Representatives David Caprio, left, and John DeSimone.

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The Providence Journal / Connie Grosch

PROVIDENCE — In a high-pitched budget debate that stretched late into the night, the state House of Representatives on Wednesday voted to reinstate $25 million of the $55 million in local revenue-sharing money that had been headed for the chopping block as part of a controversial deficit-avoidance plan for this year.

Facing an unusual level of opposition from rank-and-file lawmakers, House Democratic leaders also dropped, for now, a proposed 2-cent hike in the state’s gasoline tax, which currently stands at 30 cents a gallon though consumers already pay an additional one-cent environmental-protection fee at the pump.

Before giving their final approval of the entire deficit reduction plan, on a 58-16 vote at 10 p.m. — the full Senate is expected to take it up on Thursday — the House lawmakers also backed off a plan to delay a multimillion-dollar “cost-of-living” increase for nursing home operators.

But they kept intact a proposal to tax the first $2,400 in new unemployment compensation benefits that Congress sought to spare from taxation. They also voted to raise the cigarette tax by $1 to the highest state level in the nation — $3.46 a pack — while rejecting repeated bids to halt a progressively declining income tax option favored by 2,200 of the state’s wealthiest taxpayers that is expected to cost the state $37.2 million this year alone.

All were part of the debate on a budget-repair bill, aimed at averting a $357 million deficit in the state’s $7.2 billion current-year spending plan. The mid-year budget-cutting decisions were eased, but not obviated, by the anticipated arrival of $188 million in federal stimulus dollars.

The gas tax increase would have raised an estimated $9 million more annually. Between April and October this year and next, the added revenue would go the cities and towns to help maintain local roads and fix potholes. In the months and years after that, it would go to the cash-strapped Rhode Island Public Transit Authority.

House Finance Committee Chairman Steven Costantino, D-Providence, told colleagues the gas-tax increase is not necessarily dead for the year. He said the leadership wanted to wait and see what neighboring Massachusetts does to its own gas tax to make sure Rhode Island — and especially its border-town gas stations and convenience stores — remain competitive.

Reaction was mixed. While several lawmakers bemoaned the loss of the extra money for public transportation and road repairs, House Minority Leader Robert A. Watson, R-East Greenwich, called the delay a “cynical” move to gain time to quiet the opposition before moving ahead with a potentially larger tax increase.

“Everybody in this room knows what that means,” Watson said. “Instead of two cents, we can do six cents.”

“We’re raising your taxes, trust me … [and] the fact that it was done in secret without any real meaningful dialogue, and the fact that we only held it back because we took a wall of criticism justifiably… [and] we held off because we want to overreach even beyond that, that’s offensive, it’s cynical. And it’s embarrassing,” Watson said.

The state aid debate spanned hours, despite an early — and almost universally supported — decision by the beleaguered Democratic leadership to reinstate $25 million of the $55 million in local revenue-sharing dollars targeted for elimination.

After rejecting several bids to further reduce the state aid cut, the House approved this section of the proposed $7.2-billion budget repair bill on a 41-to-33 vote. Rep. Stephen Ucci, D-Johnston, argued that the vote fell short of the two-thirds vote of all elected members required to change the current-year aid package. House Speaker William J. Murphy disagreed with his reading of the law.

Asked during the long debate where the money came from to reduce the size of this mid-year cut in local aid, Costantino pointed to an across-the-board cut, a potential end-of-year surplus and federal stimulus dollars that otherwise would have been spent next year. As to why the communities aren’t getting more, Costantino, D-Providence, noted the communities are also getting $35 million in new and previously unbudgeted federal stimulus dollars to help blunt the cut.

The decision to restore a chunk of the money was attributed to strong objections from rank-and-file lawmakers to the eradication of a major local aid program for the home communities. “A lot of the freshman had spoken,” acknowledged freshman Rep. John Carnevale, D-Providence. “I think this is a class of freshman that’s going to speak up. That’s what we were put here for. We weren’t put here by the voters to sit down and not take an active role.”

Not everyone was satisfied, however. Rep. Al Gemma, D-Warwick, told colleagues the situation was akin to breast-feeding: “What happens when you keep depending on Momma?” He said the lawmakers would have done the cities and towns a favor by giving them some of “the tools” Governor Carcieri proposed as a way to help the communities reduce their spending.

Rep. John Loughlin, R-Tiverton, proposed full restoration of the revenue-sharing, saying that in many cases, this is money that has been budgeted, obligated and already spent.

But House Majority Whip Peter Kilmartin, D-Pawtucket, warned that whatever local aid is reinstated this year means “a harder hit” in the budget for the year that begins July 1: “That monsoon is coming.”

He also took issue with the idea of taking minimum-manning requirements out of negotiations for police and firefighter contracts, which was one of the “management tools” Republican Carcieri proposed. Warning that such moves could “cost lives,” Kilmartin, a lawyer and longtime Pawtucket police officer, said: “Give me a break.” The Loughlin proposal met defeat.

Several Democrats tried to further reduce the state aid cut, or spare their own communities. For example, Rep. Jon Brien, D-Woonsocket, sought to reinstate 100 percent of the reduced state aid for financially “distressed communities” such as his own. But his proposed amendment also met defeat, after Costantino said: “This is not the time to pit communities” against one another.

Added Rep. Charlene Lima, D-Cranston: “I can make a case that all the communities in this state are distressed the way this economy has been going,” but “the people of our districts and the people of this state have said loud and clear: trim things down and cut costs.” While some cities and towns have, others have not, said Lima warning that “if we give back more money today, the cities and towns are going to lose that incentive to make those cuts and that will come back, trust me, to haunt us.”

Ten Democrats joined the six House Republicans in voting against the bill. Those who voted nay included: Republicans Laurence Ehrhardt, John Loughlin, Brian Newberry, John Savage, Joseph Trillo and Robert Watson, and Democrats John Carnevale, Grace Diaz, Robert Flaherty, Karen MacBeth, Rene Menard, Amy Rice, Gregory Schadone, Stephen Ucci, Anastasia Williams and Thomas Winfield.

All the other lawmakers voted for passage, except Rep. William San Bento who was absent for the final vote.

kgregg@projo.com