Christine Stuart photo
House Minority Leader Themis Klarides outside Malloy’s office (Christine Stuart photo)

A retirement incentive for state employees is off the table, but Gov. Dannel P. Malloy said there is a potential for state employee layoffs.

Legislative leaders were the first to exit the governor’s Capitol office and announce that the retirement incentive program was off the table.

But as far as layoffs are concerned, Malloy didn’t rule out the possibility there may need to be some.

He said the proposals on the table could require some number of layoffs, “but we’re not talking about wholesale” layoffs.

“Departments that operate 24 hours a day—it’s really tough to make savings there,” Malloy said.

Legislative leaders and Malloy will meet again Wednesday to see if they can’t reach a compromise on closing the $350 million budget shortfall.

“Everybody came today with at least some level of compromise,” Malloy said. “I think it’s going to take additional compromise. But I have not felt an agreement could be reached and I feel that it’s certainly possible now.”

House Minority Leader Themis Klarides, R-Derby, said when they leave the meeting and agree to meet again, “that’s always a good sign.” However, lawmakers struggled to characterize or quantify how close they are to reaching a deal.

“I think the numbers are getting closer,” Senate Republican Leader Len Fasano, R-North Haven, said.

Christine Stuart photo
Gov. Dannel P. Malloy (Christine Stuart photo)

House Speaker Brendan Sharkey, D-Hamden, said they are still aiming for next week, but there’s a small “wrinkle” in the scheduling.

Sharkey said if the legislature calls itself back into session there’s a 10 day notification period. The governor can call the legislature back in 48 hours, but hand-delivering the notice to all 187 lawmakers in the state is costly.

Malloy said they are still looking to make next week the goal.

All of the legislative leaders said they were still looking at restoring some of the reduction in funding to hospitals despite the threat of potential litigation over the constitutionality of the hospital tax.

Fasano said he didn’t think that would weigh heavily on the process.

Majority Leader Joe Aresimowicz said he thinks all of the caucuses have been supportive of the hospitals through budget negotiations.

Malloy rescinded about $63 million from the hospitals in September, but legislative leaders have all restored at least a portion of that money in their budget proposals.

“They’re going to do what they’re going to do … and we’re going to do what we have to do,” Klarides said. “This is a separate process.”

The Connecticut Hospital Association delivered letters to two state agencies on Monday challenging the constitutionality of the hospital provider tax.

Malloy, who has shown no sympathy for the finances of the hospitals, said he believes the tax will sustain a legal challenge.

“The hospitals want to be able to dictate to the people of Connecticut—you are going to pay us a lot more money, period,” Malloy said.

He said he doesn’t believe that’s a message that’s going to resonate.