Rhode Island Gov. Donald Carcieri last week announced that the state has a $372 million deficit for fiscal 2009, which began July 1, due in part to weaker revenue collections.

Year-to-date revenues are down by $233 million, with growing expenditures and a $10 million deficit from the prior fiscal year adding to the state’s financial challenges.

“We expected revenues to be down due to the current economic climate, but we did not anticipate the shortfall would be this great,” Carcieri said in a press release. “The gravity of the situation is going to require more dramatic steps. We have already made significant reductions in personnel costs and human service and social welfare programs, while attempting to minimize the impact on funding for cities and towns.”

The governor said he would meet with legislative leaders this week to draft potential spending cuts. Programs that could see a reduction include local aid payments to cities and towns. State officials will review all state contracts and may revise revenue policies.

In mid-October, Fitch Ratings downgraded Rhode Island’s $1 billion of general obligation debt to AA-minus from AA, citing declining revenues and a weakening economy. Moody’s Investors Service and Standard & Poor’s rate the state Aa3 and AA, respectively.

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