Steven M. Costantino, right, House Finance Committee chairman, foreground, talks with Rep. Kenneth Carter.

The Providence Journal / Bob Thayer

PROVIDENCE –– Tempers flared in the State House yesterday as legislative leaders grilled Governor Carcieri’s department heads about chronic overspending that has exacerbated a budget hole that now threatens services and programs for tens of thousands of Rhode Islanders.

The House Finance Committee called upon nearly every major department director to explain spending decisions responsible for almost $80 million of Rhode Island’s current-year deficit of $357 million, believed to be the largest budget shortfall as a percentage of state spending in the nation.

“This committee is not trying to be contentious. We’re trying to put pressure on you because we are in crisis,” committee Chairman Steven M. Costantino said after a particularly tense exchange with Gary Alexander, director of the Department of Human Services.

DHS is on track to overspend its budget targets this year by nearly $30 million.

Alexander vowed to end the fiscal year that ends June 30 with a balanced budget, but said his department wouldn’t release a specific budget-balancing plan for another two weeks, despite an Oct. 1 deadline that has been ignored by most major departments.

“It would seem to me that corrective action should get to the budget office … yesterday,” an angry Costantino told Alexander.

The budget pressures have already led the governor’s office to order the Jan. 1 closure of the Westerly and West Warwick branches of the state Division of Motor Vehicles. And Costantino yesterday suggested that irresponsible budgeting at DHS “has put every single health and human service program” in jeopardy.

Lawmakers noted a state law that holds department heads personally responsible for intentional overspending.

“A state employee who knowingly, willfully, and repeatedly authorizes actions resulting in encumbrances or spending of state funds in excess of amounts appropriated may be fined up to $1,000 and/or terminated from employment,” reads the statute, which also requires department heads to submit “plans of corrective action … to prevent reoccurrence.”

“That has never been used. It’s not necessarily the best alternative,” the governor’s budget officer, Rosemary Booth Gallogly, said of the fine, adding that “not many” department heads had submitted written plans of corrective action.

But top administration officials have been proactive, she said.

They regularly review spending requests by departments with a history of budget problems, such as the Corrections; Children, Youth and Families, and Human Services.

“In many cases, expenditures that departments feel are critical will not be processed in order to force the issue,” Gallogly said, noting that finding savings “is becoming more difficult … I would say there is very little low-hanging fruit.”

W. Michael Sullivan, director of the Department of Environmental Management, characterized overspending at his department as “a personal failure.”

The DEM expects to end this year in the black, but it finished the last year with a $1.7-million deficit, according to Sullivan. Still, he doubted the wisdom of fining department heads.

“Do I need a public flogging? Do I need an uncomfortable meeting to remind me of my responsibility? Absolutely not,” he said.

Costantino asked Jerome Williams, director of the Department of Administration, whether the governor’s office could assume direct control over state departments that overspend.

“I think the best we can do, without doing a hostile takeover, is really [scrutinize] the expenditure side,” Williams said. “I can’t go in there and run a department.”

Costantino also questioned whether the governor had sufficient knowledge of spending in departments under his control. Directors make up the governor’s cabinet and answer directly to him.

Reached at a separate event yesterday, Carcieri suggested that overspending was not necessarily his directors’ fault.

“In some cases, some of the directors got dealt a budget that was not practical,” he said, also attributing overruns to implementation delays in cuts to human service programs. “These are affecting people’s lives, so you try to do it in an orderly fashion.”

The governor’s budget office projects overspending in several departments, including DCYF ($15.9 million), the Department of Mental Health, Retardation and Hospitals ($7.9 million), and even the governor’s office ($211,798).

The Finance Committee yesterday was most troubled by promised savings at the Department of Human Services related to major health insurance changes, dubbed the “global Medicaid waiver.”

Alexander insisted that the plan, being negotiated with federal officials, is not dead. But he acknowledged that delays probably mean his department would save little more than half the $67 million initially projected for this year.

“I am personally responsible to deliver the savings to taxpayers,” Alexander said. “The bottom line is spending has been out of control in this state for many, many years. We’ve finally come to roost here. Judgment Day is here.”

— Cynthia Needham contributed to this report

speoples@projo.com