Legislature still at odds over strategy to trim deficit

Hartford - As Connecticut's fiscal 2010 budget slides further into deficit, a divided state legislature voted Monday evening to trim state spending and delay a scheduled tax cut on wealthy estates.

But Republicans and some members of the Democratic majority ripped the legislative effort as far too small - a roughly $40 million mitigation bill that cuts some programs and shifts cash to close the shortfall, and a $76.2 million tax bill that postpones changes to the gift and estate tax.

In the current fiscal year, which ends June 30, legislative analysts project the budget to be nearly $400 million out of balance, but lawmakers disagree on how to close the gap.

And as the legislature acted, Gov. M. Jodi Rell announced that she would ask state employee unions to reopen negotiations in search of new concessions. But union officials said shortly afterward that they would not negotiate additional give-backs for state workers.

Democratic leaders called their bill a responsible step toward balance and renewed the charge that Rell is "overspending" the budget that she allowed to become law earlier this year. Senate President Donald E. Williams Jr., D-Brooklyn, pointed to more than $212 million in agency deficiencies in the current fiscal year, saying Rell is failing to stay on target to find more than $473 million in savings before June 30.

"The governor needs to live within the means of the biennial budget," Williams said.

The mitigation bill would address only the roughly $116 million shortfall in incoming tax revenue, Williams said, not "overspending" by state agencies.

But Williams' Republican counterpart, Senate Minority Leader John McKinney of Fairfield, declared that a "shameful argument" and said Democrats were trying to push the responsibility for making unpopular cuts onto the governor.

In declaring that Rell was overspending, critics were obscuring the fact that much of that spending consists of entitlement programs that cannot be easily cut - like rising Medicaid costs linked to the worsening economy - or areas in which legislators themselves would be unlikely to accept reductions.

"Go ahead," McKinney said. "Who's going to stand up and offer to cut the state police?"

The bill also highlighted strains within the large Democratic majority caucuses, particularly in the Senate, where a core of moderates has grown more uncomfortable with proposals to raise taxes and critical of the failure to make deeper spending cuts.

"I couldn't in good conscience vote for a package that didn't address the seriousness of the problem," said Sen. Andrew Maynard, D-Stonington, who voted against the deficit mitigation bill. But he added that he thought Senate leaders had been partially constrained by the firmer resistance to deep social-service cuts among the House leadership.

Sen. Andrew McDonald, D-Stamford, huddled in a private discussion before the session with Williams, Majority Leader Martin Looney, D-New Haven, and Sen. Jonathan Harris, D-West Hartford, and eventually voted for the mitigation package. But McDonald was the only Democrat in the Senate to buck the leadership on the vote to postpone the scheduled cut in the estate tax and raise its top rate, which he said reversed a commitment made in the budget last summer that was intended to offset the income-tax increases that the legislature passed on wealthy taxpayers.

"It was important to my constituents then, and it remains important today," McDonald said of the estate-tax change.

The mitigation bill passed the Senate, 19-15, with four Democrats opposed. The estate tax changes passed with stronger support, 22-12.

In the House, the measures passed on largely party-line votes.

In a written statement, Rell said she was "profoundly disappointed" in the legislature, dismissing the bill as a few spending cuts and "sleight-of-hand accounting."

"It is time they stop the rhetoric and the finger-pointing and take their responsibilities seriously as elected officials and make the tough decisions," Rell said. Her statement gave no indication as to whether she would veto either of the two bills passed on Monday.

Republicans did question some of the cuts recommended by Democrats, however, including multiple speakers in the House who objected to a $76,000 cut that would require the closure of one of two facilities in the state for the honorary Governor's Horse and Foot Guard.

But most of the debate centered on whether cuts went far enough.

Sen. Andrea Stillman, D-Waterford, who voted for both bills, said the legislature's package was not enough, but it was a start. And she countered Republican declarations that failure to make heavy cuts now would lead to more borrowing to erase the deficit later this year.

Not possible, Stillman said: "We're borrowed up to our eyeballs, and we can't borrow anymore."