Governor Carcieri reviews his speech before his television address Wednesday that spelled out budget cuts to make up an estimated $357-million deficit.

The Providence Journal / Gretchen Ertl

Heading to the governor’s budget address on Wednesday night, Cranston Mayor Allan W. Fung was expecting the worst. With the country in a recession and the state facing a massive budget deficit, he knew Rhode Island’s cities and towns would have to share some of the pain.

Afterward, Fung had one reaction: Things were worse than he had imagined.

“I was expecting to hit the ground running,” said Fung, sworn in as Cranston’s mayor last week. “I wasn’t expecting to hit the ground, and hit the ground hard.”

Looking to close a current-year state deficit of $357 million, Republican Governor Carcieri proposed a sweeping plan of cuts that would, among other things, wipe out $55 million in aid to cities and towns — the entire allotment they were expecting — as well as some $50 million in aid to local schools.

Mayors and municipal leaders say the noneducation cut would be unprecedented, forcing some cities and towns to scale back services, seek union concessions and lay off employees to make their budgets work.

At least one community — Cranston — was not ruling out the possibility of a mid-year tax increase.

“Everything is on the table,” said Fung, a Republican, sworn in just 48 hours before the governor announced his plan. “I’m going to do my best not to do that, but I can’t rule anything out.”

If the governor’s plan wins General Assembly approval, Rhode Islanders could feel the impact regardless of whether their cities or towns raise taxes.

It could come in the form of reduced services or reduced hours at municipal offices. It could also show up in the schools.

While school districts aren’t being pinched as hard this year because the governor’s plan defers some costs, educators said the spending reduction this year would lower the ceiling on what districts could spend next year, leading to deeper cuts. Educators also said the plan could spark a massive wave of retirements before the current school year ends, if proposed teacher pension changes take effect on the targeted date of April 1.

“We wouldn’t be able to put people in front of some of the students,” said Warwick Supt. Peter P. Horoschak.

ON THE MUNICIPAL SIDE, mayors and managers say the governor’s plan leaves no option but to look for immediate cuts.

Warwick Mayor Scott Avedisian, a Republican, whose city stands to lose $4.1 million in nonschool aid during the current budget cycle, said he has already trimmed some $1 million from this year’s budget and will meet with union leaders to see how they can help.

“Hopefully, the unions will be willing to make this work,” he said.

While Avedisian ruled out a mid-year tax increase and called layoffs a “last resort,” he did allow for the possibility of program cuts.

By contrast, his counterpart in neighboring Cranston held out all options as he travailed through his first week on the job.

Fung said he will meet with labor leaders but kept all options open, including program cuts, layoffs and a mid-year tax increase in Cranston, which would lose $4.6 million in nonschool aid under Carcieri’s plan. The city does have an undesignated “rainy day” fund balance of $18.9 million, but Fung said he would rather not touch it because reducing the surplus reflects poorly on a community’s fiscal health.

“The rating agencies want to see a healthy surplus in reserve,” he said.

Even if a community did raise taxes, it might not help as much as people think.

State law caps the amount of money communities can raise through local taxes. This year’s cap limits communities to a 5-percent increase, which means, for instance, that Providence, which approved a 3.75-percent increase, could not close its potential shortfall even if it went to the limit, said Richard I. Kerbel, chief of administration for Democratic Mayor David N. Cicilline.

With Providence standing to lose $13.1 million in nonschool aid, Cicilline said he will seek concessions from unions and relief from state mandates.

While some local leaders have criticized the governor’s plan, Cicilline said he was pleased that it at least relieves cities and towns of minimum staffing requirements in union contracts, as well as a state mandate requiring school bus monitors.

Of course, union concessions are no guarantee.

Cicilline’s administration may have spent its last bit of goodwill with the unions in a fight that reached the state Supreme Court last year. Providence labor unions challenged a proposed health-care change that was to net the city nearly $11 million in savings over the next three years. The city ultimately won some of the sought-after savings, but the aftertaste could make it tougher to get concessions, said City Councilman John J. Igliozzi, who chairs the council’s finance committee.

“The administration has to be willing to be somewhat humble and try and create a better relationship,” he said.

Still, firefighters union president Paul Doughty said he is willing to talk, as the union has in the past when the city was faced with great financial challenges.

“We understand the gravity of the situation,” he said. “In the past, we’ve conceded to givebacks on vacation days. We’d be willing to talk about that and more. But the mayor needs to be physically at the table.”

ON THE EDUCATION SIDE, the governor’s plan would cut $40.7 million in state aid that would have helped districts make their pension contributions. Districts, in turn, would be able to defer those contributions this year.

The plan also cuts $5.8 million for professional development and $4.3 million the districts were promised with expanded gambling at Twin River.

Horoschak, the superintendent in Warwick, said districts were told not to expect the Twin River money. Warwick has spent more than $200,000 of its $453,015 allotment, meaning it would have to find savings somewhere else, he said

Horoschak’s biggest concerns, however, were a possible exodus of teachers if pension changes take effect April 1, and the lower budget ceiling the district would have for the coming year after tallying up this year’s cuts, including nearly $3.6 million in deferred pension costs. The lower ceiling could lead to program cuts, staff reductions and possibly even the closing of a school next year, he said.

WITH SO MUCH PAIN coming their way, local leaders have been quick to criticize the governor’s plan.

In Cumberland, which could lose $1.3 million in non-school aid, Democratic Mayor Daniel J. McKee said the plan is unfair to communities that have already run lean operations.

“For communities that have fat, those proposed reforms work,” he said. “But the governor’s budget presents a hardship for communities that don’t have fat. There are communities with lifetime Blue Cross/Blue Shield benefits for teachers and 5-percent cost-of-living increases for employees. That’s just not Cumberland.”

Amid all the questions about what could be cut in communities across the state, one thing was certain: the Fourth of July festivities that draw thousands to Bristol each summer aren’t going away.

Town Administrator Diane C. Mederos, a Democrat, said it is too soon to say what could be cut if state aid is reduced, but she was adamant about the parade.

“I can’t imagine any amount of cuts that would stop our Fourth of July parade,” she said. “Absolutely none. There’s no way…”

With reports from staff writer Alisha A. Pina.

pmarcelo@projo.com