Stimulus eases RI budget crisis

PROVIDENCE, R.I. (AP) - A federal stimulus plan provides hundreds of millions of dollars to ease Rhode Island’s budget deficits and help local school districts facing funding cuts, but it will not solve the state’s budget crisis, lawmakers said Wednesday.

The funding is desperately needed in Rhode Island, which slid into recession early and is suffering from 10 percent unemployment. The tanking economy has crimped consumer spending, driven down tax revenue and caused big imbalances in the state’s $6.9 billion budget.

Rep. Steven Costantino, chairman of the House Finance Committee, said lawmakers must still cut spending to close a budget deficit estimated at $357 million and growing for the fiscal year ending in June.

After getting a public briefing from state fiscal experts, Costantino said the stimulus would help, but that “there’s still a significant budget problem.”

State officials expect Rhode Island will receive more than $131 million in federal funding this year to support the state’s Medicaid program for the elderly, poor and disabled. It expects to get $262 million more in the coming two years.

Increasing federal support for Medicaid frees state money that can be spent elsewhere. Cities and towns have been clamoring for lawmakers to reverse cuts in state aid proposed by Gov. Don Carcieri, a Republican.

Democrats hold a veto-proof majority in the General Assembly, but Costantino said they have not decided whether to restore those looming cuts for municipal government.

Local school districts, including several facing their own budget shortfalls and preparing to lay off staff, would be eligible for more than $83 million, according to estimates by the fiscal experts.

Rhode Island could receive $165 million more to support its kindergarten to college education system. But the U.S. Department of Education may require that Rhode Island increase its education spending to qualify for that additional stimulus funding.

More than $137 million is earmarked for upgrading transportation infrastructure in the state, according to the estimates. If state authorities fail to sign contracts authorizing the work within one year, the federal government can give the funding to other states.

Carcieri signed an executive order earlier this month creating an office responsible for vetting infrastructure projects and sending its recommendations to the governor for approval. On Wednesday, Rep. Raymond Sullivan Jr. and Sen. Joshua Miller proposed creating a special legislative committee to oversee how the money is spent.