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New Gap, Of $176 Million, In Stimulus Funds To State

CHRISTOPHER KEATING

February 21, 2009

The state's budget picture got a little gloomier Friday as officials said the state expects to receive $176 million less than what had been projected from the federal stimulus package.

Republican Gov. M. Jodi Rell expected $2.019 billion in stimulus funds over three years to help fill huge holes in the state's budget, but the latest figures from the state legislature's nonpartisan fiscal office say the amount is likely to be $1.843 billion.

But Rell's budget office is not giving up and is trying to squeeze money from other categories in the stimulus bill — including criminal justice grants, employment services, child care, immunization, and emergency food and shelter.

"We're analyzing the rules," said Jeffrey Beckham, a spokesman for the budget office. "We just don't know yet. Sometimes you can't use it to supplant state money."

Various numbers on the stimulus have been floating around the state Capitol for the past 10 days as fiscal analysts have tried to understand a bill of more than 1,000 pages and decipher the complicated formulas that allocate money to all 50 states for Medicaid, education, and other programs. State officials have been alternately optimistic, pessimistic, and unsure at various points as the numbers were being revised.

Even at this stage, they said the numbers could change again.

Word of less federal aid was not welcome news, as state tax collections have slowed considerably.

"It's another hole in the budget," said House Majority Leader Denise Merrill, a Storrs Democrat. "It's another problem."

Most of the lost money will be in federal education funding, which is projected to be down by $138 million in each of two years — compared to the amounts that Rell originally expected. Medicaid funding remained almost exactly the same as predicted at $1.29 billion over three years.

On the upside, the bill contains tax cuts for many Connecticut families, and the measure is projected to create or maintain about 41,000 jobs in the state. U.S. Rep. Jim Himes of Greenwich came to the Capitol complex Friday to meet with Merrill and House Speaker Christopher Donovan to talk about the stimulus.

"The big thing is that it's going to create jobs, and we desperately need them right now," Merrill said. "It will create jobs not only in construction, but in health care and energy-related fields."

The stimulus will provide Connecticut citizens with federal tax cuts of $250 for Social Security recipients and disabled veterans, $400 for single workers, and $800 for couples.

The stimulus will provide about $372 million for the state budget in the current fiscal year, keeping the deficit smaller than it would have been.

Rell announced Friday afternoon that her latest estimate for the state deficit in the current fiscal year has increased to $944 million because fewer tax dollars are being collected. That projection is still lower than the $1.35 billion deficit estimated by the legislature's fiscal office.

For the two coming fiscal years, Rell estimates a budget deficit of another $6 billion, while the legislature's fiscal office puts the figure at $8.7 billion.

Rell called upon lawmakers to make deep spending cuts when the General Assembly convenes Wednesday to discuss the latest deficit-mitigation package.

"Attacking the shortfall in bits and pieces simply has not worked. Instead, the gap has continued to grow," Rell said. "Cutting spending is never easy or fun, but in times such as this, it is the only sensible approach."

Senate President Pro Tem Donald Williams, D-Brooklyn, called on Rell to increase her deficit projections to the levels predicted by the legislature's fiscal office.

"It is past time for an honest discussion to take place with the people of Connecticut about the size and scope of the budget crisis," Williams said. "I remain hopeful that Gov. Rell will quickly revise her deficit projections for the biennial budget and that we can work together to help Connecticut through this difficult time."