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Connecticut: Dems Propose Tax Hikes, Spending Cuts; GOP Sees 'Gimmicks'

CHRISTOPHER KEATING

April 02, 2009

Democratic legislators will propose increasing taxes today in a budget they say cuts deeper than Gov. M. Jodi Rell's proposal over the next two fiscal years as the state faces a deepening economic downturn.

Rell's spokesman, though, responded Wednesday night that the Democratic plan is balanced partially with "accounting gimmicks" and proposals for savings that may never be realized.

"There's an abundance of chicanery in this budget," said Christopher Cooper. "The Democrats have spent the last 84 days claiming they were looking for ways to balance the budget. Apparently, their search ended in the taxpayers' pockets."

Top Democrats repeatedly declined to provide details to reporters Wednesday, but Capitol insiders said they expected the proposal to include more than $1 billion in tax increases. Those increases would likely include hikes in the state income tax on Connecticut's wealthiest residents and a surcharge on the corporate profits tax — two ideas that were used to close the budget gap during the state's last fiscal downturn in 2003.

When asked if lawmakers will propose tax increases, Senate President Pro Tem Donald Williams said, "Yes, there are revenue adjustments. We are going to leave the details of the tax package to" today. He added, "We have cut more than the governor has cut. This is a tough budget for tough times. ... Every agency and department is going to be taking cuts."

House Speaker Christopher Donovan said the Democrats will offer a plan that closes the state's projected $8.7 billion deficit over the next two years — as calculated by the legislature's nonpartisan fiscal office.

Rell and the Democrats have been clashing for the past two months over the precise size of the projected deficit in the $38.4 billion, two-year budget. Rell originally said the deficit would be $6 billion over two years, but she recently revised the deficit projection to $7.4 billion.

The Democrats said they will preserve funding in health care, education, transportation and energy programs in what they called "an honest budget" that will be balanced.

Capitol sources said that the Democrats have rejected Rell's plans for major consolidations and mergers throughout state government, and that they will preserve the Permanent Commission on the Status of Women and the offices of the consumer counsel, health care advocate and child advocate.

Cooper was critical. "There's no cut whatsoever," he said. "No downsizing of any kind."

Insiders said the plan will propose borrowing money to close the deficits — a tool that the legislature used in both 1991 and 2002. Borrowing money for day-to-day operating expenses is considered by some legislators a bad idea and a last resort in difficult economic times. When asked if the Democrats will propose such bonding, Williams said, "It's on the table."

Even without seeing every detail Wednesday, Republican legislators decried the Democratic plan.

"It is unfortunate that our repeated pleas and requests to play an active role in developing a bipartisan budget have gone unheeded to this point," said House Republican leader Lawrence Cafero of Norwalk.

While details of the Democratic plan were spilling out, Rell's budget director, Robert Genuario, was sending a letter to all agency heads that told them to develop contingency plans to cut their personnel budgets by 5 percent, 7 percent and 10 percent over the next two fiscal years.

Genuario's one-page memo, obtained by The Courant, states that the plans for the cuts will be needed if the closed-door talks with the state employee unions "do not reach the necessary savings." Rell's budget relies on $295 million in employee concessions in each of the next two years, but no agreements have been announced with the unions.

"Layoffs may be a part of your plan if you are unable to achieve the required 5, 7 or 10 percent reduction through other means," Genuario said in the letter addressed to agency heads statewide. "Layoffs must be made on a programmatic basis, and no employees should be exempted if a program is to be eliminated or reorganized in a way so as to eliminate the need for specific positions."

All budget cut plans are due to Genuario's office by April 14, but any cuts must be approved by the Office of Policy and Management and Rell before being enacted. The earliest the cuts would occur would be the start of the new fiscal year on July 1.