Chafee said it's essential to use the state's slowly improving finances to boost spending on schools, workforce development and roads and bridges â¿¿ all investments that he said would pay off in the long-term and reverse an economic decline that saw Rhode Island become one of only two states to lose population from July 2011 to July 2012.

In addition to the $30 million in new public education funding, Chafee proposes $8 million in additional higher education spending to avoid tuition hikes at state universities.

Chafee also proposes spending $3 million on a workforce training program that would reimburse businesses who offer internships. He also wants to use $3 million in federal funds to offset the cost of child care for struggling parents.

Laurie White, president of the Providence Area Chamber of Commerce, said Chafee's proposals to invest more in workforce training and higher education are promising and said the reduction of the corporate income tax will please many business owners. That's a contrast to previous years, when many business leaders angrily protested Chafee's failed proposals for expanded sales taxes.

"We wanted to see a plan for economic growth," she said of Chafee's budget recommendation. "So we certainly like the idea at first blush."

The proposed spending plan would not reverse many of the steep cuts approved by lawmakers in leaner years, including a $15 million reduction in funds for the developmentally disabled.

Linda Teoli's 54-year-old brother Jeff has a developmental disability and has fewer services available to him following the cuts. She criticized Chafee for not restoring the funds.

"These cuts were devastating," she said. "They're not doing enough to help these people."

In his third state-of-the-state address, Chafee restated his support for gay marriage legislation, expected to get a vote in the House this month.

He also touched on the debacle surrounding the state's $75 million loan guarantee to former Red Sox pitcher Curt Schilling's video game company 38 Studios, which has filed for bankruptcy. Chafee opposed the investment as a candidate and said it's an example of the kind of poor leadership Rhode Island can no longer afford.

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