Rhode Island Gov. Donald Carcieri said on Friday he would allow the General Assembly’s $7.8 billion fiscal 2011 budget to become law without his signature.

“This budget assumes approximately $108 million from the federal government in enhanced [Medicaid] funding that Congress has yet to appropriate,” Carcieri said in a press release. “While the budget includes a provision for the next governor to make reductions in spending should Congress not act, having this gaping hole in the budget is ill-advised.”

The Democratic-led legislature passed the tax and spending measure on June 4 that closed the current year’s $182 million deficit as well as its projected $366 million deficit for fiscal 2011. The budget restored cuts to a motor vehicle excise tax reimbursement in the current fiscal year and sharply reduced the reimbursements next year. The Republican governor had proposed that the reimbursement be completely eliminated.

Under the old law, motorists were exempted from the first $6,000 of a vehicle’s value when paying the tax. The state paid localities the difference. Now that exemption has been slashed to $500 and the state will reimburse localities a total of $10 million compared to $134 million that had been budgeted in fiscal 2010.

A late add to the budget was a $14.7 million bond issue to preserve open space that will appear on the November ballot. There was also a pension reform for employees not yet eligible for retirement that caps inflation-based cost of living adjustments at 3% and applies them only to the first $35,000 of a retiree’s pension.

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