PROVIDENCE -- Governor Carcieri released a $6.88 billion spending plan today that seeks to close the largest budget deficit in nearly two decades by cutting millions from the state's public college system, diverting hundreds of elderly, disabled and neglected children away from residential programs on a voluntary basis, and freezing state education aid to cities and towns.

The governor's 2008-09 budget also dramatically reduces eligibility for the state's welfare and subsidized health care programs, replaces hundreds of state employees with private contractors, and allows more than 200 prisoners to leave the Adult Correctional Institutions early.

Facing a deficit estimated by the administration at $384 million, the governor's budget officer Rosemary Booth Gallogly said every effort was made "to share the pain." Virtually every state department was targeted.

And Carcieri stood fast by his pledge not to raise taxes. The spending plan relies heavily on spending cuts to balance the budget, which is required in the state constitution.

Carcieri rolled out a handful of proposals to raise fees like creating tickets for drivers who talk on cell phones, but avoided oft-discussed moves such as selling the Ocean State's bridges, privatize its lottery system, or expand gambling at the state's slot parlors.

The release of the Republican governor's budget marks the beginning of a process that will unfold over the next five months as the Democrat-dominated General Assembly debates the spending plan for the fiscal year that begins July 1. Ultimately, the legislators have the constitutional power to decide whether to accept Carcieri's proposals or not.

Separately, the Assembly will debate a mid-year budget revision aimed at closing a $151-million deficit by the end of June. That proposal would require all state employees to take off six unpaid days in the next five months and includes a mid-year $12.7 million cut in non-school municipal aid for cities and towns.

The 2008-09 budget released by the governor today, however, doesn't include specifics like furlough days, but assumes $60.6 million in "personnel savings that are currently being discussed with union leadership." Carcieri's staff would not be more specific.

A glum Dan Beardsley, director of the Rhode Island League of Cities and Towns, described a budget briefing held yesterday as "sadder than a wake at Nardolillo's funeral home."

Staring at aid cuts for the second year in a row, he said: "The governor is again proposing the same, and in my opinion, outrageous fiscal policy of transferring the state's fiscal problems to the cities and towns."

A handful of lawmakers who had been briefed on the 180-page budget summary said they had serious concerns about whether the governor's plans were realistic, as many require cooperation from federal authorities, the court system, labor unions, and even the elderly and disabled people who would be affected.

"[The governor] puts out numbers that aren't facts," said Rep. Thomas Slater, D-Providence, a member of the powerful House Finance Committee. "I don't think they're real."

Specifically, the governor has proposed saving more than $66.7 million by reducing Medicaid spending, largely by diverting seniors and disabled adults out of nursing homes to non-residential programs in the community, or back to live with their families.

The governor says the diversions would be voluntary, but he needs more than 200 seniors, 300 youths in the child welfare system, and enough developmentally disabled Rhode Islanders to fill as many as 25 group homes to leave residential care next year to meet his budget targets.

Carcieri has said nobody will be forced to leave a nursing home, or prevented from entering a nursing home. But he has not yet spelled out his plan for cutting the numbers of nursing home residents to cut costs. In fact, a budget briefing book supplied by the administration contains a one-page "placeholder" for what the administration says it will introduce later: a comprehensive "Medicaid Reform Plan.''

The Medicaid changes require waivers from the federal Centers for Medicare and Medicaid Services. Carcieri's staff said earlier in the week that they hadn't yet applied for the waivers.

Overall, the governor's spending plan cuts state spending (not including federal dollars) from the $3.4 billion total adopted by the General Assembly for this fiscal year to $3.27 billion for the coming fiscal year.

For the first time since the early 1990s, the proposal would cut -- rather than raise -- the state-funded portion of the budget by $130.9 million (3.8 percent) from this year's budgeted level.

And it's possible that the General Assembly may have to go further. State revenues like sales and income taxes are directly tied to the health of the economy. A further economic downturn could increase the size of the deficit that must be filled. Fiscal experts will gather in May to revise that estimate.