Gov. M. Jodi Rell says the state’s revenue picture is ugly, and some tough budget cuts will be necessary in the coming months.
In an interview Tuesday with The Associated Press, the governor said she is preparing a list of spending cuts and expects it will be necessary to present the legislature with a separate deficit reduction plan for its consideration. She warned that “everything will be on the table.”
“There are going to be some very difficult choices that have to be made,” Rell said. “There will be some proposals that are going to be difficult.”
Rell’s budget office estimated Monday that the state’s budget deficit for the current fiscal year will be about $300 million, more than double previous estimates. Rell said much of that projected red ink is due to falling state revenues, especially from the income and sales taxes and the state’s share of the slot machine take at Connecticut’s tribal casinos.
The estimate does not account for any fallout from the recent large fluctuations on Wall Street, she said.
Rell, a Republican, can make limited cuts to state agency spending without legislative approval– 5 percent of any appropriation and 3 percent of any fund, such as the General Fund. But she is barred from reducing municipal aid and entitlements. Rell made $140 million in cuts over the summer. She imposed an out-of-state travel ban for state employees, a hiring freeze and a hold on state purchasing.
If Comptroller Nancy Wyman agrees the deficit has reached 1 percent of the state budget on Oct. 1, then Rell will have 30 days to present the Democrat-controlled legislature with a more far-reaching deficit reduction plan. Lawmakers, however, are not obligated to act on the plan.
Rell said she is trying her best not to propose “the most onerous things,” such as state employee layoffs, to cover the gap, but isn’t ruling out an early retirement plan.
She said that a reduction in local aid to cities and towns is not being considered right now, but said the state needs to reduce its energy costs and overtime expenses.
“Municipal aid is not part of the 5 percent reduction, but if I have to present a plan to the General Assembly, then I have to look at every single option that we have in order to cut and save money,” she said.
The General Assembly’s Democratic leadership is not convinced that making cuts in the middle of the fiscal year makes sense.
“We should certainly be watching this very carefully, economizing wherever we can, but not unnecessarily rushing to judgment,” said State Senate President Don Williams, D-Brooklyn. “Rushing to judgment right now to fix a problem that comes due at the end of June next year may be premature, I think is almost certainly premature.”
Rep. Denise Merrill, D-Mansfield, co-chairman of the legislature’s budget-writing committee,said many state agencies, including the state universities, are still struggling to cover Rell’s initial $140 million in cuts. Given the instability on Wall Street, Merrill said the state’s fiscal situation could still change.
“I think we need to be looking at a much bigger picture here,” she said. “I think we just have to keep going on the path we are already on. I think we are on a pretty good path and we should not deviate at the moment.”
The legislature has scheduled a hearing on Nov. 18 to get an update on the state’s fiscal situation. But Republican lawmakers are planning their own hearing Thursday with administration and legislative budget officials.
Senate Minority Leader John McKinney, R-Fairfield, said lawmakers need to learn about the extent of the deficit problem and act quickly.
“If we wait until the fiscal year is done, you can’t cut spending,” he said.
Merrill said it is possible the state could cover the deficit with money from the its $1.4 billion Rainy Day Fund.
“It may be raining,” she said. “It’s at least drizzling.”
Rell said with the next two fiscal years projected to be in deficit, she doesn’t want to spend any money from the state’s savings account.
Christopher Cooper, Rell’s spokesman, said the governor’s budget office believes that fiscal year 2010 could be $1.2 billion in deficit and fiscal year 2011 could be $1.5 billion in deficit if spending trends continue unchecked.
“This is a dark, dark cloud and there are prospects of darker clouds on the horizon,” McKinney said.
