Projo Politics Blog

By KATHERINE GREGG
Journal State House Bureau

Governor Carcieri has not yet disclosed how he proposes to close the expanded $200-million deficit for this year and next.

With the General Assembly in its closing weeks, he has not held a news conference or released a detailed plan for plugging the additional $70-million hole in this year's budget, or the additional $130 million gap in his spending plan for the new budget year that begins July 1.

But Carcieri is nonetheless on the radio touting his "FY2010 budget'' in an ad financed by undisclosed donations to the nonpublic TransformRI.

The deficit has grown to a potential $590 million next year, but the governor's message has not changed since he first unveiled his tax and spending plans months ago. He contends that cutting taxes "will create jobs and make Rhode Island the most business friendly state in the Northeast. ... Rhode Island will become competitive with Massachusetts and extremely attractive to new and existing businesses.

"It will also keep more retirees here."

"Government does not create jobs," he says in the ad. "Government's job is to create an environment for business to prosper. ... With these new tax reforms Rhode Island will have a compelling story to tell, a story that will not only attract and retain businesses but will also keep our seniors from fleeing the state to avoid excessive inheritance taxes. ... Call your state representatives today and tell them we need tax reform now."

Carcieri is proposing a swath of tax cuts, including an expansion of the earned-income tax credit for the poor, a five-year phaseout of the 9 percent corporate income tax and an increase in the estate tax exemption to $1 million.

But the ad does not mention a key finding of the governor's tax study panel.
To support the tax cuts without creating an even larger revenue hole, an estimated 110,179 tax filers would each have to pay an average of $1,261 more in income taxes. The vast majority of them are individuals and couples making less than $75,000 annually, as commonly used deductions for mortgage interest and local property tax payments are replaced with a new standard deduction.

Paul Dion, chief of the state Department of Revenue's Office of Revenue Analysis, recently recalculated the numbers issued by Governor Carcieri's tax-reform panel, based on the newest data from 2007. His findings showed that, if the panel's proposals were adopted: 324,340 resident tax filers would see a tax decrease. The median decrease would be about $122, meaning half of the filers would receive a tax decrease of less than $122 while the other half would receive more.

But 97,817 resident tax filers would still see a tax increase. The median increase would be $188.

Asked again on Friday when the governor intended to unveil the final pieces in his state budget-cutting plans, his press secretary, Amy Kempe, referred questions to Anthony Bucci, the insurance agent who runs TransformRI. As previously reported, Carcieri, a Republican, closed his public campaign fundraising and spending account earlier this spring.

When contacted, Bucci said he could not answer the question, and did not know the answer and didn't know why Kempe had referred it to him.

 Tags  budget deficit Carcieri tax cuts TransformRI

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