Christine Stuart photo

Democrats and Republicans were still no closer to solving the state’s estimated $9 billion deficit Thursday afternoon, but they were able to agree on one thing—not raising taxes over the next two years creates a structural hole in the budget in 2012.

Democratic lawmakers continued to argued that spending cuts, tax increases and borrowing needed to be part of the solution, while Republican lawmakers argued tax increases in this economy would only make things worse.

House Minority Leader Lawrence Cafero, R-Norwalk, said there’s no doubt the budget both the Republicans and Gov. M. Jodi Rell put forth creates a structural hole in 2012.

“Maybe by the end of this biennium things will turn around enough to get us out of this hole,” Cafero said.

Senate Minority Leader John McKinney, R-Southport, said the level of borrowing included in Rell’s latest budget proposal is “troublesome,” but the reason it needs to be done is because the Democratic majority rejected most of the governor’s earlier budget mitigation efforts.

“In terms of our structural hole we’ve always known that with this economic downtown we were going to need to rely on the Rainy Day fund and we’re using federal stimulus funds,” McKinney said. “But that’s why its so important not to be raising taxes right now.”

“It’s a bad idea in a bad economy,” McKinney said before admitting, “it may be necessary down the road.”

Christine Stuart photo

Democratic lawmakers who proposed increasing taxes by about $3.3 billion over the biennium said they are willing to look at more spending cuts, but they have to be smart cuts.

“Not the reckless and dangerous things that will hurt us in the future,” Majority Leader Denise Merrill, D-Mansfield said.

“Our delegation here in New Britain does not believe for one minute that the people of Connecticut want to turn the clock back on much of the social progress we have made over the last 20 or 30 years,” Sen. Donald DeFronzo, D-New Britain, said. 

DeFronzo said Rell has been reluctant to talk about any kind of tax increase, but she “has not at all been shy about saddling every man, woman, and child in the state of Connecticut with a debt for the next 10 to 15 years.” He said her proposal to borrow more than $900 million amounts to $700 of debt for every resident in the state of Connecticut.

“We can pay for this upfront or we can pay for this later,” DeFronzo said.

Rep. John Geragosian, D-New Britain, who has been part of the budget negotiations said if he wanted to take the easy way out he would suggest cutting the budget 20 percent across the board. He said the governor’s budget includes $4.2 billion in one-shot revenues over the biennium.

Over the course of the past few months, Geragosian said Democratic lawmakers have accepted many of Rell’s cuts, but many of her plans, such as her plan to close six courthouses, was not well-thought out.

Where do we go from here?

With a Democratic majority in both chambers of the legislature it’s possible the General Assembly could pass a budget without the governor’s support.

But Democratic leaders seemed hesitant to move in that direction Thursday.

“The ball’s in their court,” Sen. President Donald Williams, D-Brooklyn, said.

“She’s maintained that until we agree to her cuts we can’t get together, but we don’t agree to her cuts,” Donovan said.

Donovan said Democratic lawmakers are hoping to put something together with Rell, instead of passing a budget which Rell will veto.

“I believe we could pass a budget. The question is can we pass a budget that she vetoes and that we have all the votes for, I don’t know,” Donovan said.

“We want the governor’s support and cooperation, but the state of Connecticut deserves a budget before the end of the fiscal year,” Williams said.

But how soon the two sides will get together on the issue was still unknown Thursday.

“Now that the regular session has ended, the Governor expects that lawmakers will take time to reflect on what they have and have not accomplished over the last five months,” Rell’s spokesman Chris Cooper said.

“She hopes they return with a renewed sense of commitment and cooperation and looks forward to the General Assembly passing a budget she can sign into law,” he said.

Earlier in the day Thursday Rell vetoed a bill which sought to change how budget projections were calculated when a consensus could not be reached.

The bill required budget analysts for the executive and legislative branches to issue consensus revenue estimates up to three times a year to guide the governor’s budget proposal and the one approved by the legislature.

“Ultimately, the only effect of this provision will be to insert a five-day timeout in the budget negotiations that have been ongoing for several months,” Rell said in her veto message Thursday.