Governor Carcieri, right, speaks with John M. Rhodes, senior principal of Moran, Stahl and Moyer, during the Governor’s Forum on the Rhode Island Economy.

The Providence Journal / Kathy Borchers

PROVIDENCE — Governor Carcieri said yesterday that the state can resolve the current year’s budget deficit without raising taxes.

“We have to,” Carcieri said. “I believe we can.”

His comments came in an interview at a forum he organized at the Rhode Island Convention Center yesterday to discuss the major economic issues facing the state.

The size of the deficit, for the year ending June 30, is not known, and Carcieri declined to provide an estimate; a final figure could be available on Monday, after state officials complete calculations from figures that have emerged through a conference on state revenue and expenses at the State House.

Carcieri has repeatedly said that Rhode Island should not increase the tax burden on individuals and businesses because it is already too high.

Carcieri said yesterday, “There’s going to have to be a supplemental budget” that will include changes intended to address the current year’s budget shortfall.

He suggested that at least some of the savings will have to come from state aid to cities and towns.

He said that state spending falls mainly into three categories: personnel and employee benefits; human services; and aid to cities and towns.

In the last two years or so, the number of state employees has declined. “We have really squeezed this hard,” he said of state government employment.

Human services have also been squeezed, but state aid to cities and towns has been left largely intact, he said.

Carcieri suggested that cities and towns reduce costs by taking steps similar to ones the state itself has already taken, such as consolidating services, reducing overall employment and having employees share more of health-insurance costs.

Dan Beardsley, executive director of the Rhode Island League of Cities and Towns, said that local communities have been tightening their budgets longer than the state has in some areas.

For example, the average copayment that municipal employees face for health insurance is 15 percent, and in some cases 20 percent — and that has been in effect for 15 years, or longer in certain instances, Beardsley said in a telephone interview yesterday.

He also said that cities and towns have suffered an overall loss of $25 million in state aid over the last two fiscal years.

In addition, cities and towns are already looking at consolidating services and have reaped savings through cooperative purchase programs, he said.

Beardsley also said that, because of state-imposed caps, communities are generally limited as to how much they can raise through property taxes.

He said that the Carcieri administration should not take “the easy way out” by cutting state aid to cities and towns.

In interviews at yesterday’s conference, several people had differing views on what approaches the state should take in dealing with the current budget deficit.

For example, Grafton H. Willey IV, chairman of the Rhode Island chapter of the Smaller Business Association of New England, said it is possible to balance this year’s budget without raising taxes.

He said the state will see significant savings this year because of a reduction in the state’s work force implemented by Carcieri.

Willey also said that government at all levels will have to reduce spending in the current fiscal year. “I don’t think you’ll find the cities and towns getting much more” in state aid this year, he said.

John C. Simmons, executive director of the Rhode Island Public Expenditure Council (RIPEC), a business-backed public policy group that monitors state finances, said that, in balancing the state’s budget, “The preference is always going to be to go to the expense side” first.

If Rhode Island officials focus on raising revenues to help balance the budget, they should look at raising user fees before raising taxes, Simmons said. (A recent RIPEC report showed that fees, charges and miscellaneous revenues make up 18 percent of the state’s general revenues, compared with the national average of 24.4 percent.)

Henry Shelton, coordinator of the George A. Wiley Center in Pawtucket, a statewide community action program, said, “I think there’s got to be tax increases for people who benefit from tax breaks.”

He said that Rhode Island should reduce tax breaks that are mainly geared toward high-income taxpayers, such as the optional flat-tax system used for calculating Rhode Island’s personal income tax.

“I’m not saying add a total new tax,” Shelton said. Instead, he said that tax breaks should be taken away from those who can most afford to pay. “Reduce the tax breaks for the people at the top,” instead of “punishing people at the bottom” through further cuts in human services, Shelton said.

ndowning@projo.com