In the wake of a $300 million budget deficit for fiscal year 2009 Gov. M. Jodi Rell unveiled her mitigation planTuesday, which includes no state employee layoffs, no new tax increases, and no use of the $1.4 billion rainy day fund.
The plan, which will require the approval of the General Assembly, includes new revenue and further spending cuts. Rell said she will be calling the General Assembly back for a special session on Nov. 24th to approve the plan.
The new revenue Rell expects the state to receive includes $157 million revenue from a settlement the state received from the federal government regarding its Medicaid reimbursement rates for the Southbury Training School that houses mentally retarded residents. Also Rell proposed a tax amnesty program estimated to bring in $40 million, $13.8 million in unclaimed bottle deposits, and $2 million in additional federal hospital funds.
In addition to the increases in revenue, Rell said she has also ordered more spending cuts. The spending cuts include delaying several initiatives, such as a study of the Hartford Civic Center, purchasing more state vehicles, and paying outside consultants. The governor will also be giving back her $2 million contingency fund.
The state budget deficit for fiscal year 2009 has grown over the last four months. In July Rell unilaterally ordered about $150 million in spending cuts and just last month ordered a second round of cuts totaling about $35 million. However, because the budget shortfall represented more than 1 percent of the total $18.4 billion budget, the governor was required by law to submit a deficit mitigation plan to the legislature.
Why not tap the rainy day fund?
“If we do not have to I would use that as a very, very last resort,” Rell said. “This is an interim to stop the flow of red ink to close the budget deficit now.”
She said this Thursday she will start to put together the 2010-2012 biennium budget, “which will have some very painful decisions in it,” if the revenue projections for the state continue to decline. She said she expects the 2010-2012 budget “is not going to be pretty.”
Rell said she decided to hold Tuesday’s press conference at Virginia Industries, a small manufacturing company in Rocky Hill, because CEO’s of company’s like this are making these tough decisions everyday.
Democratic Reaction
Senate President Donald Williams, D-Brooklyn, said “While a comprehensive analysis is required before we can offer a full endorsement, it looks like Gov. Rell’s budget mitigation plan is a prudent step in the right direction.”
Williams added that “We appreciate her including a tax amnesty plan, a recommendation that Senate Democrats made to the governor months ago.”
Speaker of the House James Amann, D-Milford, released this statement regarding Rell’s plans: “I commend the Governor on her work and will continue to work together with her on a bipartisan basis as we have over the past four years. Our Appropriations and Finance Committees will analyze the Governor’s plan in conjunction with our non-partisan Office of Fiscal Analysis leading up to our scheduled budget hearing on November 18, and subsequent special session on November 24.”