State House Hopefuls Offer Differing Opinions On State Deficit Bailout Plan

By John Voket

Two Newtown Legislative Council colleagues with designs on the 106th District legislative seat this November each took differing views on Governor M Jodi Rell’s multifaceted proposal to address Connecticut’s projected $302 million budget deficit. Gov Rell announced October 21 that she will call the General Assembly into session on November 24 to vote on her proposal.

While Republican contender Will Rodgers applauded the governor’s plan, Democrat Christopher Lyddy described the proposal as a one-time revenue boost which contains elements that are “simply not credible.”

Gov Rell’s plan would not raise taxes, lay off state employees, or spend the state’s Rainy Day Fund — actions other states with deficits are taking.

Instead, much of the red ink would be covered by $157 million in federal funds the state expects to receive to settle a Medicaid rate dispute. Rell has directed her budget staff to find as much additional federal revenue as possible.

“My plan does keep Connecticut’s fiscal house in order,” said the governor, who made the announcement at a Rocky Hill ball bearing assembly plant.

Gov Rell, a Republican, also expects to save $40 million by instituting a 56-day tax amnesty program in May and June 2009. That would give taxpayers a chance to pay their late state taxes without penalties, and with a 25 percent reduction in interest fees.

Democrats, who control the legislature, voiced support for Gov Rell’s deficit reduction plan. Senate President Donald E. Williams, Jr, D-Brooklyn, called it “a prudent step in the right direction.”

Mr Lyddy also credited the governor for her attempts to address the projected deficit, especially allowing a one-time tax amnesty, an idea that Mr Lyddy said “was discussed months ago.”

 He added, however, “This is still only a one-time source of revenue, and while we look to cut spending and be more efficient in how we use our dollars, we need to look at more reliable sources of revenue that will provide long-term relief.”

Reacting to the governor’s hope to collect $157 million in federal reimbursements that are dated back to 2002, Mr Lyddy stated the idea “is simply not credible.”

“Perhaps the governor can outline how these funds are going to be secured within a timely fashion, and how she is going to get around Connecticut’s spending cap that prohibits us to accept such funds at this time,” Mr Lyddy said, adding, “New dollars aren’t always the best dollars.”

The Democratic candidate said the state needs to find ways to be more efficient with the money on hand. “I question whether or not full reviews were conducted on the programs and services the governor is looking to cut.”

Secondly, Mr Lyddy believes the governor has outlined a number of cuts he does not “perceive to be ‘savings’ at all.”

“In fact, the cuts defer these costs into next year’s budget,” Mr Lyddy said. “What will next year look like with this initial burden? We need to look at where we can trim fat, not sever our lifeline. Both the governor and legislative leaders need to sit down and discuss this matter further and it will be incumbent upon the legislature to find an agreeable solution.”

Mr Lyddy said cutting programs such as health benefits, education, and transportation only bring residents further from addressing the state’s most complex problems.

Mr Rodgers said he appreciates the proposal, which the governor stated requires no new taxes, no employee layoffs, and it leaves the state’s $1.4 billion budget reserve fund (Rainy Day Fund) intact.

“The plan would also mitigate the projected deficit by identifying revenue due to the state under current law. A settlement will result in additional federal revenue due from reimbursable costs incurred in the operation of the Department of Developmental Services,” Mr Rodgers said. “And it includes a tax amnesty program expected to generate a minimum of $40 million.”

In addition to new revenues, the proposal would expand the abandoned property program to include unclaimed beverage container deposits.

“The bottom line is that the citizens and small businesses of our state simply can’t afford any additional taxes,” said Mr Rodgers. “Overtaxation is one of the main reasons our economy lags far behind all other states, and we continue to lose jobs at an alarming rate, including dozens right in Newtown at Pitney Bowes several months ago.”

Mr Rodgers said he believes Gov Rell’s proposal “recognizes this, and I appreciate her foresight in addressing the issue with a fiscally responsible approach.”

The legislature’s budget committees have scheduled a November 18 hearing to get an update on the state’s budget situation.

Gov Rell’s other proposals include delaying the purchase of new state vehicles to save $1.2 million, postponing a $250,000 study for a possible arena in Hartford, and reducing the state’s use of outside consultants by $2 million.

She is proposing a new law that would funnel unclaimed bottle deposits back to the state. Currently, if someone does not collect their nickel refund on a returnable bottle or can, beverage distributors keep the money. For years, they have fought legislative efforts to change that process.

If the bill becomes law, Gov Rell thinks the state could reap about $13.8 million.

Other proposed budget changes include:

*Making changes to state retiree pharmacy benefits, saving $14.5 million. It would require consent from the state employee unions and the legislature.

*Cutting funds to a local property tax exemption program for hybrid vehicles, saving $900,000.

*Delaying a study to consider creating a Commission on Native American Studies, saving $25,000.

*Imposing an across-the-board reduction of approximately 0.5 percent to all agencies not involved in direct client care, saving $1.5 million.

The governor already made two earlier rounds of cuts to balance the $18.4 billion budget for fiscal year 2009, which ends on June 30, 2009. Using her executive powers, she cut $150 million in spending in the initial round and most recently another $34 million.

Gov Rell has also imposed a state hiring freeze and banned out-of-state travel for state employees.

(Associated Press reports were used in this story.)