By JIM BARON

PROVIDENCE — Cities and towns, and their school departments, could be the next to feel the blade of the budget ax as the state scrambles to fill fast-widening deficits for this year and next.

The municipalities, for their part, say they are squeezed between state-imposed restrictions on how much they can increase property taxes and ever-increasing demands for more school funding.
It has gotten to the point where the director of the RI League of Cities and Towns says municipalities are warming to the idea of having the state create a single statewide school district to take over public education altogether.
The collision between the two forces could come as soon as the reconvening of the General Assembly in January, when Gov. Donald Carcieri says he will be putting forward a supplemental budget with substantial cuts in local aid.
Why cut aid to local communities? Because that’s where the money is.
“The biggest piece of the state’s whole general revenue budget ($1.135 billion, comprising 34.7 percent of total general revenue spending) is money that goes back to the cities and towns,” Carcieri said this week after his economic summit at the RI Convention Center.
Besides, there are only three places in the state budget where substantial cuts can be made — local aid, state payroll and benefits and human services — and the latter two have already taken their hits this year.
“We have put extraordinary pressure on the personnel side,” the governor said. “I just saw the stats, we’re going to be down 1,800 people in the last 16 months. We’ll be down to 12,800 plus or minus (full-time equivalent) positions. That’s the lowest in 20 years in the state. When I got here it was about 15,800. We are shrinking the size of the state in terms of the workforce, you know all of the changes negotiated in the contracts, and in retiree health care.
“We have really squeezed this hard, you won’t find any other state anywhere in the country that has gone harder at the personnel piece,” the governor said. “And we also made major reductions in the human services areas and we are in the midst of trying to finalize the global Medicaid waiver” that would allow the state to change the way it pays for nursing home care and other medical services.
“We left the local aid in the last budget intact,” he said, noting that the schools are in line for more money because they will get a share of the extra revenue from weekend gambling at Twin River. “So at the end of the day,” Carcieri said, “the pressure the state is facing is going to go back to the cities and towns and I am not going to listen to them just say they are going to raise their property taxes. No.”
That is when the municipalities will have to look at regionalizing services and make other reductions to save money, Carcieri said. “I know that a group down on Aquidneck Island just got some money to finally start looking at coordinating their school system. When I got out of Brown and taught at Rogers, it was the only high school on the island and the kids from
Jamestown took the ferry over. It wasn’t that long ago. Rogers had 1,500 kids at the time, it’s down to 600 and we’re going to build schools on Portsmouth and Middletown. Aquidneck Island is a small island, c’mon.
“You saw what happened in Providence,” he added, “they just renegotiated their health care contract with United (Health Care). That’s $8 million over three years. We have to do those kinds of things.”
Not so fast, says Dan Beardsley, executive director of the RI League of Cities and Towns.
“I reject all claims that cities and towns haven’t been tightening their belts.” He said some municipalities have been requiring employees to pay a portion of health insurance premiums since 1991, “before it was even on the state’s radar screen back then.”
Beardsley says Carcieri “is looking at state aid as a means of assisting the state is balancing the state’s budget problems. 
“Local aid did not create the state’s budget problems,” he asserts. Beardsley places the blame instead on “overspending and generous tax cuts.
“I’m not saying that property tax relief wasn’t warranted,” he explained, “but the architect of (the phase out of) the motor vehicle excise tax, (former Pawtucket Rep.) Tony Pires, stated unequivocally that it’s the best and most meaningful property tax relief program that the legislature will pass on to taxpayers of Rhode Island, but it is only good as long as we can afford it. And I believe the state can’t afford it.”
The phase out of the car tax was accomplished by the state gradually reducing the excise tax on motor vehicles, then reimbursing the cities and towns for those lost taxes. The state had to halt the phase out several years again, then Carcieri reinstituted it using revenues from video slot machines at Twin River and Newport Grand.
What could end up happening is a feud between the cities and towns and their school departments.
Beardsley said the league is going to be asking the General Assembly to change some laws during the next session “so cities and towns can control runaway spending and prevent schools from deficit spending.”
In particular, he said, municipalities would like to see the repeal of the so-called “Caruolo Act” that allows school committees to sue their municipalities for additional funding, such as is happening now in East Providence.  That way, Beardsley said, “school districts would be required to live within their budgets.
“The system is broken,” he said. “There is more and more sentiment on behalf of city and town officials for the state to simply take over public education. They have no control over it now. Let the state create a statewide school district.”
Calls seeking comment from House Finance Committee Chairman Steven Costantino and the RI Association for School Committees were not returned on Friday.