RI Gov. State Address focus, recession

PROVIDENCE, R.I. (WPRI) - Last year, Gov. Don Carcieri likened Rhode Island's economy to a troubled ship that was taking on water but could still become a world-class vessel.

Turns out, those financial leaks  a plummeting housing market, soaring unemployment and massive state budget deficits were worse than the Republican governor imagined.

Now Carcieri must define a way out of this state's economic morass in his seventh annual State of the State address Tuesday night. Rhode Island's economy began its economic descent long before the rest of the nation.

The job count peaked in February 2007 then hemorrhaged downward as a tanking housing market decimated the construction industry, crimped retail spending and put further pressure on the dwindling manufacturing sector. The state's 10 percent unemployment rate in December trailed only hard-pressed Michigan.

Besides the ongoing recession, Carcieri plans on discussing how the state should use millions of dollars of stimulus funding from the federal government intended to shore up the balance sheet of Rhode Island and other cash-strapped states. Carcieri wrote a letter to President Barack Obama last week faulting a stimulus plan passed by House lawmakers because the governor said it will not immediately create jobs.

He urged Obama to focus instead on providing direct aid to local governments so they can stave off tax increases, providing massive tax cuts for workers and rebuilding roads and bridges. The governor needs nearly $28 million in federal stimulus money to close a $357 million budget deficit for the year ending in June.

He is pushing Democratic lawmakers to close the shortfall by making deep cuts in state funding for cities and towns, raising the cigarette tax, selling state property and deferring a $10 million settlement owed to survivors and family members of the victims of a deadly 2003 nightclub fire. Part of Carcieri's remarks will focus on changes to the state's tax policy.

Carcieri, who has promised not to raise personal income, sales or corporate taxes, has blamed the state's tax system for driving away businesses and entrepreneurs. An advisory panel that Carcieri created recently suggested lowering the state's personal income tax rates and even abolishing corporate income taxes.

(Copyright 2009 by The Associated Press. All Rights Reserved.)