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Keeping R.I. 'on the move'

In his annual address, Governor Carcieri proposes property-tax relief and new college scholarships.

BY SCOTT MAYEROWITZ Journal State House Bureau | January 19, 2005

PROVIDENCE -- Governor Carcieri unveiled proposals last night to cut taxes over a five-year period, provide merit pay for teachers and pour $20 million into scholarships at the state's three public colleges.

Rhode Island "is getting stronger by the day," the Republican governor said in his third annual State of the State address.

But in order to keep the state "on the move," he said more needs to be done to attract businesses, cut spending and provide a better education, particularly in mathematics and the sciences.

For almost 30 minutes, he sketched out his agenda for the coming year to legislators, judges and other elected officials packed into the House chamber. While Carcieri made numerous pledges, his speech was skimpy on details.

Carcieri said Rhode Island's taxes are among the highest in the nation, sticking to one of his favorite topics.

"A good government lives within its means and does not overly burden its taxpayers," he said, announcing the development of a "five-year tax-reduction plan" that will be "broad-based, benefiting as many Rhode Islanders as possible."

In the past, Carcieri said one of the most efficient tax cuts would involve the income tax, according to his spokesman, Jeff Neal. However, Neal said the governor will leave it up to the Economic Policy Council to develop the five-year plan. It is unlikely that a "large-scale tax-cut plan" would be ready for the fiscal 2006 budget, Neal said.

Carcieri also proposed that new revenues from the state's lottery and video-slot machines be dedicated to the new college scholarships and property-tax relief. Neal said the governor is proposing a rebate to all property owners.

Next Thursday, the governor will submit his budget for next year. Two issues "we must address this year," he said, are state employee health care and pensions.

Rhode Island is one of five states where employees do not pay a share of their health-care premiums, while workers in Massachusetts pay 20 percent, Carcieri said.

Carcieri most recently proposed a 2-percent raise for state workers, with a 5-percent share of premiums in the current year and 10 percent next year, Neal said.

House Speaker William J. Murphy, D-West Warwick, said he has not seen the details yet, but agrees with Carcieri that "the day is here now where we have to look at copay for health insurance."

The cost of the state employee and teacher pension systems is "skyrocketing," Carcieri said. Without change, taxpayers will contribute $283 million toward pensions next year, $95 million more than this year.

But Carcieri did not say how he would fix this "urgent problem." A panel he commissioned failed last year to reach consensus on how to reform the system. Neal said Carcieri would unveil his plan next week.

House Majority Leader Gordon D. Fox, D-Providence, said the legislature is "working on some of our own proposals" regrading pensions.

"I don't think it's going to be resolved by broadening contributions," he said. Fox said the lawmakers' inquiry extends from investment assumptions to benefits. "Maybe some of our pension rules are too generous and need to be addressed."

He proposed a statewide curriculum, alternative teaching certificates, merit pay for teachers and the creation of a Commission on Math and Science Education, which he will co-chair with Dan Smith, president of Raytheon's Integrated Defense Systems division.

The governor's education proposals got a cool reception from union leaders, including Robert A. Walsh Jr., executive director of the National Education Association Rhode Island, who said: "We have never been in favor of merit pay for teachers."

"It is an issue that's bargained locally," he said. "It has never come up in any of the districts that we represent. We don't expect it to come up. We've never seen data showing that it makes sense."

Rhode Island is lacking enough charter schools, Carcieri said, particularly in urban communities. He plans to submit legislation removing the moratorium on new charter schools even though it is set to expire June 30.

Walsh said that his union would prefer Carcieri to "focus on the 150,000-plus kids who are currently in the non-charter public schools than the 500 kids on a waiting list for charter schools."

To help Rhode Islanders meet the cost of higher education, Carcieri pledged to invest an additional $20 million for increased scholarships for more students to the state's three public colleges.

In the two years prior to Carcieri taking office, the state spent about $5 million a year on scholarships. That has since nearly doubled. Under his new "Tuition Opportunity Program," $29 million would be set aside for scholarships.

Carcieri estimates that an additional 5,000 students -- above the current 11,500 -- would get scholarships. The average scholarship would be $1,600 and there would be extra incentives for students pursuing nursing, math or science careers. Recipients would need to meet certain merit and income guidelines.

The $20 million would come from the state's cut of 459 new slot machines at Lincoln Park.

CARCIERI SET a goal when he took office two years ago to create a net gain of 20,000 jobs for the state by the end of his four-year term. As of Dec. 31, Carcieri said, Rhode Island has 9,300 new jobs.

"We have demonstrated to the business community that we are a business-friendly state -- that we are creative, responsive, and forward-thinking. And it's paying off," he said.

In the coming year, Carcieri said he is determined to break ground on a new train station in Warwick -- providing a link to T.F. Green Airport -- and to "move forward" with a new station in Wickford. The governor also said he wants to see Boston commuter rail service extended to South County.

To bring more jobs to the state, Carcieri proposes a Jobs Partnership Act, where the Economic Development Corporation would borrow $54 million to make loans to small businesses, develop commercial real estate and help grow a biotechnology community.

"We will look not solely to tax breaks to lure new jobs, but to creative solutions to the problems that entrepreneurs face," he said.

The governor also touched on several other initiatives, including:

A red-tape reduction task force, which would make it easier for businesses and residents to deal with state agencies.

Placing caps on medical liability, mentioned in last year's State of the State, but not implemented.

A reduction in workers' compensation rates.

A long-term regional solution to energy needs "without building new [liquefied natural gas] terminals in heavily populated areas" which drew one of the biggest rounds of applause of the night.

Of the speech, Lt. Gov. Charles J. Fogarty said: "Promises are great, but it's the follow-through that really matters and I think that, up till now, the administration's follow-up has been fairly sporadic."

Read the full text of the Governor's address

With reports from Katherine Gregg of the State House bureau.

From The Providence Journal

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