Christine Stuart file photo
Gov. M. Jodi Rell (Christine Stuart file photo)

Gov. M. Jodi Rell’s cost cutting measures have left the state, which was headed for a $52.9 million budget deficit, with a $22.3 million surplus this year.

In a press release Monday, Rell said she would be calling the General Assembly back into special session to set aside the surplus in a special emergency heating fund to help residents cope with anticipated high home heating costs this winter.

Republican and Democratic lawmakers will be reacting to Rell’s announcement Tuesday afternoon.

Keep reading the Governor’s press release below

GOVERNOR RELL SAYS FISCAL ‘08 ENDS WITH SMALL SURPLUS, WANTS MONEY DIRECTED TO ENERGY ASSISTANCE

Governor Calls for Special Session to Deal with Energy Issues

Governor M. Jodi Rell today announced that the fiscal year that wrapped up June 30 ended with a slight state budget surplus – money Governor Rell is proposing be set aside in a special emergency heating fund to help residents, especially senior citizens on a fixed income, cope with anticipated high home heating costs this winter.

Governor Rell said her Office of Policy and Management is projecting a surplus of $22.3 million for FY08, largely because of the cost-cutting measures she has implemented in recent months. In May, OPM projected a budget deficit for FY08 of $52.9 million. Since then Governor Rell has banned out-of-state travel by state employees; directed agencies to reduce their gasoline consumption; ordered a freeze on hiring; and told commissioners and agency chiefs to suspend purchasing except for emergencies. The Legislature also passed a deficiency bill in special session to cover overspending by a handful of agencies.

The cost-cutting measures remain in effect because the state faces a projected shortfall of about $150 million for the fiscal year that began July 1.

As difficult as current gasoline and food prices are making life for Connecticut consumers, Governor Rell said, “the high costs of heating homes and businesses this winter may strain budgets to the breaking point – and beyond.”

“Services such as the Connecticut Energy Assistance Program and ‘Operation Fuel’ have been lifesavers for many,” the Governor said. “But we expect many more families will need help this fall and winter.

“In fact, we anticipate receiving assistance requests from those who have never asked for help before,” Governor Rell said. “And I am particularly fearful for our senior citizens, who are already struggling with high utility and other costs. They must be a special focus of our efforts for heating assistance.

“Moreover, I worry this will be a winter unlike any we have seen in recent memory – a time when not only the most vulnerable among us struggle to pay energy bills, but when many middle-class families may find they simply cannot keep pace with the prices of food, gasoline and energy,” the Governor said.

“I believe we must use this surplus as the first ‘deposit’ in an account we can tap this winter to provide help for seniors and other people overburdened by these rising costs. We know this problem is on the horizon. It is only prudent to begin setting aside money now.”

Directing the surplus to such a purpose requires the approval of the General Assembly. Governor Rell said she is therefore calling for a special session in the next few weeks to enact the plan and consider a variety of other measures she is developing.

“My Administration has been working with community groups and others to develop a range of proposals,” the Governor said. “I know this is an issue that has been on many legislators’ minds as well, and I believe we can develop swift, bipartisan consensus on the steps our state can take to help residents and businesses get through the winter season without financial collapse.”

Governor Rell noted that the Center on Budget Policy and Priorities in Washington, D.C., reports that 18 states ended FY08 with budget deficits – four of them in New England as well as New York.

“I am proud that Connecticut erased the red ink,” the Governor said. “Cutting spending is never easy or fun, but with gasoline, staple foods and energy prices climbing through the stratosphere our taxpayers need us to tighten our belts.”

Other factors influencing the FY08 projections include slightly higher-than-expected income tax payments for June and lower-than-expected income tax refunds. However, OPM cautioned that during the months of April, May and June withholding taxes have shown zero growth – a trend that, if continued, would significantly affect projected tax receipts for all of FY09.

To cope with the anticipated shortfall in FY09, Governor Rell has ordered budget rescissions of 3 percent to 5 percent at state agencies. The rescissions will reduce General Fund expenditures by a net total of about $104.2 million. The Governor has told legislative leaders she will need their assistance in finding further spending cuts.