New taxes posed as alternative to cuts

PROVIDENCE, R.I. (AP) - Another battle over taxes and budget cuts is brewing in Rhode Island as lawmakers look for ways to plug a budget shortfall now pegged at $120 million.

Advocates for the disabled, homeless and other vulnerable Rhode Islanders are calling on lawmakers to raise taxes before reducing services. It's a message that resonates with some lawmakers who are already proposing legislation to raise income taxes on wealthy individuals.

Top legislative leaders, however, told The Associated Press that they will look for ways to balance next year's budget without deep cuts to services or tax hikes, which they said could hurt the economy at the worst possible time. The General Assembly began the 2012 session on Tuesday.

Gov. Lincoln Chafee, an independent, has said he is "considering" recommending a tax increase, though he hasn't offered any details. Later this month he is expected to release his budget proposal, which will contain possible budget cuts or tax increases.

In the meantime, parents of disabled children are urging lawmakers to find ways to reverse a $24 million reduction in services approved last year, when lawmakers eliminated a deficit that once stood at $331 million. The state's overall budget for the current fiscal year is $7.7 billion.

Noelle Siravo said the cuts have reduced the number of caregivers available to help her disabled 40-year-old son Joseph live independently. The Pawtucket woman worries that her son might have to move into an institution if the state doesn't restore the lost funding.

"These cuts have really taken a toll on the people who depend on these services," Siravo said. "These are the most vulnerable citizens we have. It's easy to take things away from them because they don't have a voice."

Top lawmakers said they sympathize and that the downturn has forced them to make hard budgeting decisions.

House Speaker Gordon Fox (D - Providence) said he would like to find a way to help citizens with developmental disabilities, but he said a tax hike isn't the only way to do it.

"You judge a society by how you treat people like these," he said. Asked if he would support a tax increase to restore the funding, Fox added "I'm not convinced yet that we've gotten to that point."

Republican leaders said they believe there is still room to cut the budget by consolidating programs or slashing administrative costs. House Minority Leader Brian Newberry said there is enough money to deliver services disabled Rhode Islanders need if lawmakers find smarter ways to budget taxpayer dollars.

"We should be looking at these `painful cuts' the Democrats never want to make," said Newberry (R - North Smithfield). "There are places we can consolidate, places we can look for efficiencies."

Still, other lawmakers said they are already in the process of drafting legislation to raise taxes. Rep. Larry Valencia (D - Richmond) said he plans to introduce bills that would bump up income taxes on the state's top earners -- those who make more than $200,000 a year, by one measure.

"The prevailing attitude here is not to raise taxes, but it's an option that needs to be looked at," Valencia said. "The more you cut from the social safety net, the more burdens you create for many Rhode Islanders."

Similar tax proposals were rejected last year, as was an ambitious broadening of the state sales tax suggested by Chafee.

Instead, lawmakers imposed the 7 percent sales tax on the purchase of non-prescription drugs, some software downloads and sightseeing tours.

The new taxes are expected to raise an estimated $17 million this fiscal year.