The legislature’s Democratic majority and Republican Gov. M. Jodi Rell have not reached an agreement on how to erase this year’s $371 million budget deficit, but they may be getting closer. Sources say this plan was offered by the Rell administration earlier this week as a compromise to the deficit mitigation plan passed a few weeks ago by the Senate during its late night session.

The plan includes an additional $65 million in spending cuts and does not raise taxes as the Senate deficit mitigation plan did. Neither side is talking about the plan, which was obtained by CTNewsjunkie Thursday afternoon.

Rell’s latest plan eliminates the estate tax increase, which she vetoed in December. Democratic lawmakers have continued to insist the tax increase is necessary and would sunset in two years, but Republican lawmakers have said it would be the highest tax on wealthy estates in the country and would encourage people to leave the state.

Rell’s plan also rejects the Democratic proposal to create a 5.5 percent tax on hospital profits. The tax would raise about $207 million, but it would also help it leverage more federal funds, which in turn would be redistributed to the state’s 32 hospitals. Rell had initially proposed a 3.25 percent hospital tax when she released her deficit mitigation plan on March 1.

The latest plan also sweeps more money from off-budget accounts like the Citizens’ Election Program, which is expected to help fund the 2010 statewide elections.

Karen Hobert Flynn of Common Cause said the latest plan to take $10 million from the fund would deal a “mortal blow,” to the entire program.

Over the past year and a half the Governor and the General Assembly have cut more than $38 million from the Citizens’ Election Program, Hobert Flynn said. If they take $10 million it would leave the program with insufficient funds and the matching grant levels promised to candidates would have to be lowered.

Any further cuts to the fund will mean the state Elections Enforcement Commission will have to declare an “insufficiency” of funds and reduce grants to participating candidates for the 2010 election cycle, Hobert Flynn said.

By law the fund is not allowed to operate at a deficit.

The Senate’s deficit mitigation plan, which the House never took up, cut $6 million from the program. Rell’s initial mitigation plan cut $12 million.

Hobert Flynn said she doesn’t think lawmakers understand how taking this money will impact the entire program.

It would allow candidates to begin raising special interest money again and defeat the purpose of the entire program.