The Rhode Island House is expected to vote on a deficit mitigation bill today that would close the state's current-year $357 million budget gap. If it passes, the full Senate could take it up as soon as tomorrow.

Republican Gov. Donald Carcieri sharply criticized the proposal last week after it passed the House finance committee but spokeswoman Amy Kempe said the governor would wait to see what finally passed the House before commenting on it further.

The House's supplemental budget would increase the enacted fiscal 2009 budget by $304.2 million to $7.22 billion. The proposal would use $270 million of funds that are available primarily from the federal stimulus package. The governor's proposal assumed savings of $43 million from changes to the pension system which the House version does not include.

Greg Pare, spokesman for Senate President Teresa Paiva-Weed, said that lawmakers hadn't had enough time to study the governor's proposal to include it in a midyear budget. The Senate is "committed to looking at some pension reform, it's just something that's going to take place in the new fiscal year's budget," he said.

Carcieri criticized the lack of action on his pension proposal. "We all know that the state can no longer sustain the current pension system," he said in a statement.

The House plan would increase the gas tax by two cents per gallon to 33 cents, cigarette taxes by $1 to $3.46 per pack, and would sharply increase certain motor vehicle fees. It would also cut municipal aid by $55 million and education aid by $9.1 million.

Carcieri's January proposal would have also cut municipal aid by a similar amount but would have eased state mandates on localities to offset some of the cuts.

The cuts to municipalities would be "painful" Pare said. "Nobody's happy about it but obviously the cuts have to come from somewhere," he said.

Calls to House speaker William Murphy's office were not returned by press time yesterday.

"I am gravely concerned with much of the proposal put forth by the General Assembly to address the state's estimated $357 million deficit," Carcieri said in a statement. "The General Assembly has chosen to avoid making the tough decisions while tying the hands of cities and towns and raising taxes."

Pare said that there was general agreement among the Senate and House leadership on the bill but that it was "still a work in progress" and that the Senate would have to consider any amendments that might get tacked on in the House.

The state has been hit hard by the bursting real estate bubble and faltering economy. Last month, the state's unemployment rate hit 10.5% compared to the 8.1% national average. Year-over-year home prices fell by 25.8% in February, according to a report released yesterday by the Warren Group, a real estate data firm. The median selling price for a single-family home fell to $184,000, a $64,000 drop.

Last month Carcieri proposed a $7.62 billion all-funds operating budget for fiscal 2010, which begins July 1. Under Carcieri's proposed budget and capital plan, Rhode Island would sell $350 million of tax anticipation notes and $50 million of bonds through the Rhode Island Turnpike and Bridge Authority and $95.4 million of general obligation bonds.

The state would also market $206.2 million of taxable state-backed bonds to fund liabilities for a now discontinued program that awarded tax-credits to preserve historic buildings.

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