Christine Stuart photo

Republican Gov. M. Jodi Rell indicated Thursday that she’s prepared for a lengthy budget battle with the legislature’s Democratic majority unless they agree to further state spending cuts.

“We just can’t afford our state government anymore,” Rell said Thursday in an interview in her Capitol office. “It’s just too big and it costs too much.”

“The majority party has made it clear they won’t cut,” Rell said. “They are protecting literally every nickel, every dime, every program, every service, every line item. No one wants to cut, no one. But we have to.”

Democratic legislators said they’re not opposed to cutting spending, however, with very few places left to cut and the need for increased state revenues, they would rather raise income taxes on the state’s wealthiest residents than hurt those who need services.

At a press conference Friday Speaker of the House Chris Donovan said Rell’s proposed cuts to health care and social services “will produce pain.” He said Democratic lawmakers have already agreed to a lot of the cuts Rell has proposed.

“There are cuts we made in ours that she doesn’t want. She wants to add back as well,” Donovan said Friday.

Christine Stuart photo

He said Democratic lawmakers are asking families who make $600,000 a year to chip in an additional $20 a week to help pay for services to help some of the states most vulnerable residents. He said asking those families to do that may be a “minor distraction, but it won’t cause pain for those people.”

Rell countered that all the cuts don’t have to be in the areas of social services, health care, and education. “We can cut in other places and I have that in my budget,” Rell said Thursday.

Rell said Democratic lawmakers were shocked when they walked into her office Wednesday and were presented with a list of further spending cuts. Donovan and Sen. President Donald Williams had expressed optimism just one day before that saying they were inches apart from a deal.

Rell said Thursday that they were never close to a deal.

At a time when the economy can least afford it, “They’re saying we want to cover everything with taxes,” Rell said. She said families are struggling and now is not the time to increase taxes.

It’s unclear how much raising taxes on those making over $600,000 a year will help since the state’s revenue collections are down this year by about $2 billion.

What’s next?

The Democratic majority will look to pass a budget on its own without an agreement from the governor.

“We’re seriously considering running a budget,” Donovan said Friday. He said during good economic times its tough to get a majority to pass a budget and getting a supermajority to override a potential gubernatorial veto is even harder, but its something they will consider.

In the meantime, Donovan said they will try to get the governor to understand the impact of her proposed budget cuts.

And Rell will try to defeat their argument that it’s the wealthy who will be paying just $20 more a week. “That’s a false, misleading argument,” Rell said Thursday. She said what increasing taxes by $1.8 billion and borrowing another $2 billion means is that the $5,220 tax bill paid by the median income level in the state will need to go up to pay for the debt.

Both the Democratic budget proposal and Rell’s rely heavily on borrowing to help close the $8.56 billion budget deficit. And both to some extent create an estimated $2 billion structural budget hole three years from now because both include the use of one-time revenue streams such as federal stimulus funds to make up for some of the revenue loss.

Rep. David McCluskey, D-West Hartford, said Friday before Donovan’s press conference that he doesn’t understand why Rell is digging her heels in over the income tax.

“If her predecessor John Rowland can raise income taxes in 2003, during a down economy, why can’t she do it?” McCluskey said.

During his tenure, Rowland campaigned on decreasing and even eliminating the income tax, but in 2003 under his leadership the income tax increased for the first time since 1991 from 4.5 percent to 5 percent. A budget was signed on Aug. 16 of that year.

The first income tax was implemented in 1991 under then Gov. Lowell Weicker Jr. and a budget agreement was signed on Aug. 22, which until this year was the longest the state had ever gone without a budget agreement.

With no deal imminent it looks like this year will go down in history too.