As Republican Gov. M. Jodi Rell’s administration winds down she’s looking to leave office with a balanced budget, but there are at least two unresolved issues that may make things difficult for her. The first is the reduction in federal funding for low-income heating assistance. The second is a lawsuit filed by an incoming Republican state senator.

Earlier this week Rell wrote the legislature’s Appropriations, Human Services and Energy & Technology committees to tell them if they had only adopted the lower benefit levels she had suggested in September then the program may not have run out of money before the month of December. Rell suggested returning the program to previous eligibility levels, which would have limited the amount of households able to receive assistance.

“Both actions were intended to ensure this year’s program would continue to serve Connecticut residents who were most in need while recognizing that—because we cannot spending money we do not have—state government was not in a position to step in and replace federal funding,” Rell wrote.

However, she concluded the letter by telling lawmakers that “we are ready to immediately begin helping you identify spending cuts in other areas of the budget that would free up funds to ensure that adequate heating aid is maintained.” It’s unclear what spending cuts Rell may have in mind.

Rell, who has been criticized in the past for relying too heavily on borrowing, added that “I want to be very clear that I will not support additional borrowing to pay for the ongoing expense of the state’s heating program.”

The suggestion was apparently made by Rep. John Geragosian of New Britain, who chairs the Appropriations Committee.

In a phone interview Friday afternoon Geragosian said his words may have been “mischaracterized,” and he didn’t explicitly say the state should look at borrowing more money, but he was careful to point out the state doesn’t plan on borrowing the $956 million it budgeted because revenue projections were better than expected. It is currently looking at borrowing around $650 million, according to budget analysts.

“The issue of how much we’re going to borrow has not been dealt with yet,” Geragosian said. “The budget is a living breathing document.”

He said the state should explore all of its options before ruling anything out because nothing should be off the table when “we’re talking about people that won’t have heat this winter.”

But since the Low Income Home Energy Assistance Program (LIHEAP) is funded solely with federal funds it’s possible the legislature will have to convene a special session in order to use state dollars to fund the difference. House Speaker Chris Donovan and Senate President Donald Williams are exploring their options, but it’s unclear at the moment whether a legislative session would be entirely necessary.

Jeffrey Beckham, a spokesman at the Office of Policy and Management said the state received approximately $37.2 million less in LIHEAP funds than it did the previous year and it’s “questionable” whether the state would be able to transfer funds to the federal program.

“Regardless, there are not sufficient available resources in other DSS accounts to cover the problem,” Beckham said.

Legislative leaders said they are researching the issue and will have a better idea of what funds can and can’t be transferred on Monday.

Meanwhile, Rell has been urging state Treasurer Denise Nappier to issue the $650 million in Economic Recovery Revenue Bonds so that the legislature doesn’t begin to add more money to the amount of borrowing the state currently anticipates.

Already the amount of borrowing has been reduced from $1.3 billion to $650 million, which Rell says will save taxpayers $770 million in debt service over the life of the bonds.

While Nappier doesn’t disagree with Rell’s totals she warned her that there are several things her office has to do in preparing for the sale of the bonds, including monitoring the lawsuit filed by incoming Republican state Sen. Joseph Markley of Southington.

Markley filed a lawsuit challenging the Department of Public Utility Control’s ability to continue to collect a portion of consumers’ electrical bills to pay off the Economic Recovery Revenue Bonds. A hearing in the matter has been scheduled for Dec. 6.

Rell urged Nappier to issue the bonds before the end of the year, but Nappier said in a letter to Rell that she is monitoring the issue daily and will issue the bonds “at the most opportune and cost-effective time.”

At no point did either Rell or Nappier mention in their exchange the Office of Fiscal Analysis’ report pegging the current year’s budget deficit at $83 million. Rell’s budget office had concluded on Oct. 20 that the state had a $300,000 surplus. It’s unclear if the legislative and executive branches will reconcile the difference in their estimates later next week. State Comptroller Nancy Wyman will issue her financial outlook on Dec. 1.