During an exclusive interview yesterday with The Herald, former Cranston Mayor Stephen Laffey, reportedly planning a run for Governor next year, said that the state’s budgetary problems, and the fact that they’ve become local budget problems, should surprise nobody who has been paying attention.

Governor Donald Carcieri announced on Monday that he was proposing a $125 million cut in aid to cities and towns. The cut would cost Cranston $6.6 million in state aid.

Laffey has been sounding the fiscal alarm in op-ed pieces and talk radio appearances for the last several years. He will not yet acknowledge whether or not he is running for Governor.

For the last several years, the state budget, he said, has been based on one-time fixes like the approximate $230 million in federal stimulus funds used to balance this year’s budget, rosy revenue projections that could never be realized, and irresponsible borrowing in the form of tax anticipation notes (think of payday lending).

The end result, he said, are drastic mid-year reductions in aid, leaving cities and towns with little leeway to cope.

Laffey said that every legislator who voted for the budget, and Governor Donald Carcieri, a fellow Republican who signed it, should not be in office.

“Everyone involved should resign. Either they didn’t know it would come to this, or they did and I’m not sure which is worse,” said Laffey.

Sounding every bit like a candidate for Governor, Laffey said the state’s political landscape is in need of a serious makeover. At a press conference to announce the appointment of a new economic development director late last week, talk centered on the need for everyone to “work together” to find solutions. Laffey, however, who didn’t attend the event, suggested that the approach was misguided. Instead, he said the state needs reformers who are ready for a battle.

“The bottom line is we’re going to need somebody, or a group of people, to run for public office who will take the fight to the established political order, and by that I mean the public sector union leaders and the General Assembly,” said Laffey. “There needs to be a direct fight … and unless we do that, we’ll continue on the road to collapse.”

Laffey didn’t hesitate to offer solutions.

Laffey said the state should end the pension system, which costs state and local taxpayers about $500 million per year. The move would lead to property tax cuts. Laffey said the state should take the existing pension fund and divide it up among the workers that have paid into it.

Laffey also said the state’s cities and towns need relief from onerous mandates like minimum manning requirements, legislation that would force public sector employees to pay higher co-share payments on health insurance, and ending the Carruolo Act, which allows school districts to sue municipalities for more funding. The mandates were largely proposed in Carcieri’s Supplemental Budget Proposal, as they were in previous years. The legislature has never approved any of the reforms.

Laffey also said the state needs to adopt the federal guidelines for welfare signed by President William Clinton in the nineties. Rhode Island’s welfare program is considered more generous than the federal government’s.

“We need to become a workfare state,” said Laffey.

A memo from Carcieri, which was inadvertently leaked to the media on Monday, seemed to agree with Laffey’s assessment about special interest groups.

“As I said earlier, our fiscal situation leaves us with only difficult choices. We have for too long now not tackled the tough issues and given in too early to special interests. We can no longer afford to operate as business as usual,” reads the Carcieri memo.