Rell:

State Now Faces ‘Difficult Choices’

By Susan Haigh

Associated Press

HARTFORD — Governor 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 their 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 — five percent of any appropriation and three 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, as expected, agrees the deficit has reached one percent of the state budget on October 1, then Rell has 30 days to present the Democrat-controlled legislature with a more far-reaching deficit reduction 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 is not 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 five 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.

Representative Denise Merrill, D-Mansfield, co-chairman of the legislature’s budget-writing committee, agreed that the state is facing serious revenue problems, but said she is not convinced that making cuts now makes sense.

“I think making midterm changes is very difficult because there are contracts in place, obligations out there,” she said. “I just don’t think we have enough information.”

Merrill 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.”

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.”