By JIM BARON

PROVIDENCE — In his last State of the State speech, Gov. Donald Carcieri declared that Rhode Island should move into the future by hearkening back to the “shared values and inspiration of the state's founders,” which include “individualism, autonomy, self-reliance and dissent.”

The dissent on Tuesday was provided by a group of mayors assembled to protest the deep budget cuts in state aid to cities and towns in the governor's revised budget for the current year and those expected in the coming 2011 budget. Cumberland Mayor Daniel McKee led the call for the General Assembly to “reject the governor's destructive plan to transfer the state's deficit onto the backs of local taxpayers.”
Carcieri referred obliquely to the aid cuts, and the mayors' protest, saying, “Where some of us in this chamber disagree is whether property tax increases are inevitable.
“I know property tax increases can be avoided,” Carcieri asserted.
He said if every city and town employee in the state, including all school department employees “were to agree to a salary reduction plan this year and next, just as state workers have done, tens of millions of dollars could be saved.”
Asked after the speech what he thought of Carcieri's contention that property tax hikes are not necessary despite the cuts, McKee said, “He's dreaming. He doesn't understand local budgets if he is willing to make that comment off the podium during a  State of the State address.”
“Let me sum it up for the governor very quickly: cities and towns are not responsible for the state’s budget deficit,” McKee said in a written statement signed by 15 municipal officials, “During his administration the state budget has increased by 45 percent while funding to cities and towns has decreased by 40 percent.
The Republican governor, who is barred by term limits from seeking re-election, made the case once again for the legislature to reduce state mandates on municipalities and school districts, which he says will allow them to reduce spending, and for city and town councils to have the authority to approve all school contracts and expenditures.
“Property tax increases are not inevitable,” Carcieri told the joint session of the House and Senate, “they will not happen if this legislature enacts the changes that will allow cities and towns to control their spending.  It is within your power to do this.  I, as governor, do not have the authority to make these changes, but you do.”
“As I stand before you tonight,” he proclaimed, “our state is facing the most severe economic turmoil of the last 30 years, perhaps longer.  This challenge cannot be overstated.  We have over 73,000 Rhode Islanders out of work, with little sign that employment will improve significantly anytime soon.  We all have neighbors who’ve seen their work hours reduced and their income diminished.  They’re scrambling to pay their bills, while they watch their home values decline dramatically.  They are substantially reducing their spending just to make ends meet.”
The key to weathering the storm, he added, “is to face the challenges squarely, make the difficult choices to get through it, while at the same time building the proper foundation and bridges to the 21st century economy. It’s obvious tonight, the two immediate challenges we face in our state are financial and economic. First, how do we produce a balanced budget with less revenue, and second, how do we put more people to work as soon as possible?  Both are enormous challenges.”
To thrive in the long term, the governor said, “we need to reclaim our birthright as a hotbed for business revolution.  From the Industrial Revolution in the 19th century to the bioscience and green energy revolutions today, Rhode Island has always been a place for incubating new ideas and approaches.  Just as it did over a century ago----when R.I. had the highest per capita wealth of any state---our economy once again will rise on the tide of an entrepreneurial revolution. 
“All those textile mills that populated the banks of the Blackstone and Pawcatuck rivers were built by small business entrepreneurs, many of whom went on to build big businesses and employ tens of thousands of Rhode Islanders,” he argued. “And, just as our mighty rivers powered the Industrial Revolution that brought so many jobs and prosperity in the last century – our mighty ocean will power the Energy Revolution of this century.  Rhode Island is leading the nation in the development of offshore wind power.  The U.S. Department of the Interior has said that the East Coast of the U.S. is the 'Saudi Arabia of wind.'”
To recreate the conditions that allowed businesses to flourish back in the day, the governor stressed, will require the state to enact tax reform and regulatory reform.
Carcieri announced that he will present a 2011 budget next week, boasting that it will be balanced without raising taxes.
“The budget will also contain a major focus on jobs,” he noted, “with a package that includes:  small business tax relief; a tax credit for job creation; and programs for enhancing access to capital.  These will all be discussed in more detail in the coming weeks, after the budget is submitted.”
The two Democrats hoping to win Carcieri's job later this year – Attorney General Patrick Lynch and General Treasurer Frank Caprio – were both in the room to hear the governor's speech.
“The governor doesn't want to see taxes raised and he wants to put people back to work; those are things I'm in favor of, too,” Caprio told The Times immediately after the speech. “Right now, Rhode Islanders are sitting at their kitchen tables with a pile of bills, wondering how they are going to get by the next week and the next month. In government, we need a little more of that mindset, where you can't spend what you do not have and you make changes when you don't have the revenue to sustain programs from the past.”
Lynch said the address was “lacking in specifics. I liked some parts of it – we are finally getting some changes in the Economic Development Commission that were sorely needed, not only in leadership, but in some of the programs.”
On the other hand, Lynch said, “We are seven years into leadership that on many points has failed us. We now have to wait for the budget.”