SOME PEOPLE thought that this day would never come. But the Rhode Island General Assembly has closed some of the state’s budget deficit by actually cutting spending. Instead of hiking taxes on some of the most heavily taxed people in America, it took out the ax and chopped away, closing a $168 million deficit in this year’s budget.

House Speaker William Murphy and House Finance Chairman Steven Costantino kept their word, against enormous pressure. They held the line. Senate leaders, too, got the message. As did Governor Carcieri.

Cutting is an unpleasant task for our solons because the only real constituency for such self-control is their constituents. And average constituents are usually the last people legislators consider.

Lawmakers typically pay slavish obeisance to the organized interests on Smith Hill, notably the welfare lobby and the public-employee unions, who give legislators money and get out the vote on election day. That the politicians had to rebuff them this time, and actually act on behalf of the public good, is very big news.

It can only mean one thing. The pols are scared.

And why would they be scared?

I doubt that it’s the voters who frighten them, because even now the state’s pipsqueak Republican Party seems incapable of coming up with opponents for legislative seats. Last time around, nearly half of all seats went uncontested.

No, I think what scares them is the real prospect of Rhode Island’s bankruptcy. The state’s credit rating is getting shakier and shakier. Billions of dollars in unsustainable pension and health-care obligations to public employees are staring them in the face. And higher taxes are just not working.

Whether or not the politicians understand the Laffer Curve, they can read numbers. Economist Arthur Laffer argued that government can raise taxes so high that it actually depresses tax revenues, by driving away the businesses that produce the money government wants.

That is happening in Rhode Island. Revenues are falling, despite some of America’s steepest taxes, and the economy is in the tank. Last week, economic analysts revealed that Rhode Island is the only state in the Northeast actually in recession, and one of only nine in the nation. Its employment figures, foreclosure rates and personal-income growth lag behind those of its neighbors and the country. Meanwhile, Massachusetts (which just added 6,000 jobs), Connecticut and New Hampshire keep growing.

Our friendly neighborhood politicians did this to the Ocean State, with the voters’ blessings. They spent far beyond the state’s means, hiked taxes faster than people’s ability to earn money and gave away the store to special interests. Now everyone is reaping the whirlwind.

While the legislature’s cuts in recent weeks are a good start, they are the proverbial first step in the thousand-mile journey.

For one thing, there are only eight weeks left in the current fiscal year. Will the cuts enacted by the General Assembly really close the $168 million gap over that short period?

For another thing, the budget picture appears to be much worse, in fact, than the official numbers. They are based on predictions made in November. Things have become much bleaker since them.

And the supplemental budget is merely a warm-up for next year’s budget, which starts on July 1. That could be half a billion dollars out of whack.

For decades, Rhode Island’s politicians have been managing the decline of the state. They played it out for a long time, but the end is rapidly approaching. The only way to save Rhode Island now is to reinvent it.

That means the politicians have to completely transform the retirement benefits for public employees, including health care and pensions.

They have to rewrite state labor law to give management — that’s taxpayers — a fighting chance. No longer should local officials, alternatively bullied and petted by union bosses, be able to hand away key management rights: the right to privatize functions; to lay off unneeded employees; to determine class size, staffing requirements, academic calendars, hours, and pupil assessment.

The politicians have to consolidate functions and trim waste.

They have to be willing to take on the teachers unions, even at the risk of being attacked personally, and start focusing on what serves the interests of students.

They have to bring Rhode Island’s welfare system more in line with the average of other states — and more in line with what taxpayers here can actually afford.

They have to cut taxes to make Rhode Island economically competitive with, for starters, Massachusetts. If it cannot compete with the Bay State, it can hardly compete with Singapore and Shanghai.

Can we get there with the current crew of politicians? Real change will probably require a new generation of leaders who are more interested in the common good than in serving special interests.

Still, the General Assembly saw the light on taxes in dealing with the supplemental budget. And it will be increasingly clear, whoever serves, that economic catastrophe confronts Rhode Island unless its elected officials proceed in the coming weeks, months and years with more of the same.

Edward Achorn is The Journal’s deputy editorial-pages editor ( eachorn@projo.com).