Mar. 11--PROVIDENCE -- It was supposed to be among the most difficult decisions in his political career. Facing a crippled state economy, Governor Carcieri was charged with crafting a plan to fill what may be the largest budget deficit in state history.

But flush with cash from President Obama's economic stimulus package, the Republican governor proposed a $7.6-billion tax-and-spending plan yesterday that would increase overall state spending by 10 percent -- about $700 million -- in the next year. With the help of the stimulus funds, he wants to cut taxes for businesses and most individuals, scale back proposed cuts to cities and towns and delay pension benefit cuts for anxious state workers and teachers.

Carcieri called the stimulus money "a bridge" to better times, as he defended budget plans for the current and next fiscal year aimed at closing combined deficits exceeding $860 million.

And while it wasn't all bad news yesterday, there may be losers.

Carcieri calls for raising the state's cigarette tax by $1 a pack to what apparently would be the highest level in the nation and cutting dental coverage for 38,000 parents on the subsidized health care program, RIte Care. His tax revisions could result in income tax increases for about 110,000 middle-class Rhode Islanders. And he would give school districts far less than they could receive under the federal stimulus package.

The General Assembly will spend the coming months debating Carcieri's budget plans, before adopting its own version before the end of the legislative session. Assembly leaders immediately blasted the governor's budget plans as irresponsible.

"It exposes the state to tremendous risk. There are very few hard decisions that have been made in this budget. They restore cuts with money they don't know they have," said House Finance Committee Chairman Steven Costantino, referring to stimulus-related spending that might not be allowed. "I see this plan needing major revisions."

Further, there was broad concern yesterday that the governor is using temporary funding to fill ongoing budget needs.

He would help fill the budget shortfalls using a $321.5-million Medicaid windfall over two years from the stimulus package and $110 million from the stimulus "fiscal stabilization fund."

"In 2012, when that stimulus money is no longer here and cities and towns say to his successor, 'Governor, we need this money, it was designed to help communities,' the new governor is going to say, 'I don't have that money because it has gone to provide tax breaks for the business community,'" said Dan Beardsley, executive director of the Rhode Island League of Cities and Towns. "There's not going to be any money.