Christine Stuart photo

(Updated 8:24 p.m.) Republican Gov. M. Jodi Rell proposed cutting $337 million from the $18.64 billion 2010 budget passed by the legislature just three months ago.

Rell’s deficit mitigation plan released Tuesday afternoon assumes that the planned sales tax reduction from 6 to 5.5 percent won’t take place on Jan. 1 and cuts $84 million in funding for cities and towns.

The plan also freezes enrollment Rell’s Charter Oak Health Plan for uninsured adults and imposes co-payments for Medicaid recipients and premium increases for those already enrolled in the Husky health insurance program.

Rell’s plan also reduces by 5 percent Medicaid provider reimbursement rates for nursing homes and intermediate care facilities for the mentally retarded and reduces the amount of uncompensated care for those unable to pay for their hospital stay. And it postpones the change in age for juvenile jurisdiction matters until 2011.

“It is deeply painful even to suggest these cuts – and yet they are unquestionably necessary,” Rell said in a press release. “State government cannot afford, literally or figuratively, to allow this budget – which has only been in effect a few short months – to grow any further out of balance.”

Rell’s Budget Secretary Robert Genuario said if the legislature adopts the entire budget mitigation plan he’s hopeful “this is the only budget mitigation plan that will be necessary this year.”

Republican lawmakers were briefed on Rell’s mitigation plan prior to its release Tuesday.

“We cannot afford the inaction of the last year that led to the fiscal crisis in the first place,” House Minority Leader Lawrence Cafero, said. “We all knew that the Democratic budget the majority party passed in September was not real and out of balance as soon as it became law.”

“We are left with fewer options and even less time to start Connecticut back on a path toward fiscal stability,” Cafero said.

Rell’s mitigation plan will need to be approved by the legislature’s Democratic majority.

“The governor and her administration took about a month to compile this plan; it will take us several days to examine its merits and disadvantages,” Sen. President Donald Williams, D-Brooklyn and Sen. Majority Leader Martin Looney, D-New Haven said in a joint statement Tuesday. “We look forward to working with the governor regarding the State of Connecticut’s budget and economy.

“Thirty-five other states are currently attempting to close new deficits in their existing budgets,” the two added.

However, it’s unlikely lawmakers on either side of the aisle will be thrilled with the $84 million cut in municipal aid.

In a press release Rell said she is forming a panel of lawmakers and six municipal officials to suggest where the $84 million in municipal cuts would be made.

Jim Finley, executive director of the Connecticut Conference of Municipalities, said in a phone interview Tuesday that it’s like asking municipal leaders to choose between life in prison, or death.

Finley said Rell refers to the $84 million as a “small” cut in municipal aid, but that’s on top of the $50 million cut in municipal aid in the current budget. Since cities and towns already have passed their budgets, these cuts will be difficult to find and may call for local leaders to go back to the taxpayers for the money.

“Municipalities will have to be part of the solution, just like they were part of the successes,” Genuario said.

The governor does not have the power to reduce municipal aid without the legislature’s approval and Finley said his organization would advise them against it.

Matthew Barrett, vice president of the Connecticut Association of Health Care Facilities, called the cuts to nursing homes the “the harshest and most devastating ever seen in Connecticut.”

He said they come on the heels of already deep cuts to nursing home funding.

“On behalf of more than 28,000 individuals across our state who call nursing facilities their homes and their dedicated caregivers, our association of 110 nursing homes will be calling on our state legislative leaders and all rank and file legislators to reject these cuts for the certain harm they will cause,” Barrett said.

“The governor’s recommended cuts are unnecessary, and would have a disastrous effect on some well-established and much-needed programs, many of which have struggled for years with underfunding,” Ellen Andrews, executive director of the Connecticut Health Policy Project, said. “The vast majority of the cuts would affect people who can least afford them – the elderly, disabled, people with HIV/AIDS, and the poor.”
 
Andrews suggested Rell and the legislature instead consider “recovering the $50 million in annual overpayments to HUSKY HMOs that were uncovered in the recent Comptrollers audit.”

There’s a lot in the mitigation plan for advocates and lawmakers not to like, but Genuario said “it’s fair to say that the reductions contained in this package cut across all levels of state government.”

Rell’s mitigation plan also takes $12 million from the Citizens Election Fund, $6 million from the BioMedical Research Fund, $10 million from the Stem Cell Research Fund, and a millions more from a handful of other funds.