Carcieri goes for his cuts

The Governor on his cost-reduction plan, the casino threat, and more
By IAN DONNIS  |  October 24, 2007
CHANGING LANDSCAPE: As the state faces a potential hit on casino revenue, Carcieri says now is
the time to close the deficit.

After storming the State House as a businessman-turned-would-be reformer in 2002, Republican Governor Donald L. Carcieri has been faced this year with a state Department of Transportation controversy and continued projected budget deficits, among other difficulties. Certainly, the governor’s case wasn’t helped when the Providence Journal reported Tuesday that, prior to an unsuccessful attempt in May to cut 1000 state workers, he sought some hefty pay raises for members of his Cabinet.
Yet if the governor’s approval rating has taken a hit, and some question his ability to deliver, Carcieri seems to find motivation in things like a handwritten note sent by an elderly telephone company retiree, exhorting him to cut state spending.
The centerpiece is his plan to realize $200 million in savings in the next budget by cutting 414 state workers, eliminating almost 500 unoccupied jobs, reducing temporary employment by 115 workers, slashing $50 million in social service programs, and gaining the same amount by increasing work hours and boosting health insurance co-pays for public employees.
Unlike the vague and abruptly announced previous plan to cut 1000 state employees, Carcieri has the ability to pursue about a big chunk of his new effort without legislative cooperation. As part of a broad media offensive, the governor recently talked about his plan with the Phoenix. Here are excerpts from our conversation.

If the projected savings in this plan are realized, how well will the state be positioned to go forward from here?
Much better than we are today, because as you know, when the budget was done last year [it] was full of holes, but even that one they projected out at recurring deficits growing. So my goal is that in doing this $200 million, at least we adjust the base down, and then if we can get some of the things that I talked about in terms of contract negotiations, and slow down the growth rate of benefit expenses and all those things, all that will work together. And I’m hopeful that as we go into ’09, that as you look in the out years, we’ll be in balance — that’s my goal.
Is the state doing enough t focus on raising revenue?
Yeah. It’s not a revenue issue. That’s what I call political speak for raise taxes. Our personal income tax receipts last year, we reported up seven percent, which is very good. They’re actually up over 10, maybe even close to 12, because we have the historic tax credit program. Most of that money goes to offset personal income taxes for people that can use that credit. If you factor out the year-to-year difference in the credits we process, the actual underlying tax revenues were up, as I said, between 10 and 12 percent. That’s terrific.
I mean, in an inflation environment that’s two-and-a-half [percent], that says that we’re raising incomes and we’re generating jobs. And we haven’t been increasing taxes. We’ve been reducing taxes — the flat tax — and that began to kick in. So to me there’s a good story on the revenue side. And the corporate income tax receipts were up. The only area where the receipts have been flat or down [is] the sales tax, and the one last year that was down was the VLT revenues, because of all the changes and the new building going up at now-Twin River, then Lincoln Park. So, no, I don’t think we can raise taxes.

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