Administration, state lawmakers begin deficit talks

Hartford - Gov. Dannel P. Malloy said he expects budget deficit talks that began Monday between his administration and legislative leaders to produce a proposal that includes "painful" spending cuts but no tax increases.

Malloy's comments came after he led a meeting of the State Bond Commission, which approved tens of millions of dollars in new state borrowing for road improvements, economic development and other projects.

Administration officials are projecting a $365 million deficit in the $20 billion budget for this fiscal year, which ends next June, while state Comptroller Kevin Lembo estimates a $415 million deficit.

Malloy didn't say what the cuts would include.

"I am hopeful we can reach a bipartisan compromise on this shortfall, which is why we did not release a set of specific cuts," Malloy said Monday. "We need to go through a process.

"Many of these are going to be painful cuts, cuts that no one in my administration or many in the legislature are looking forward to making," he said. "But they are, under the circumstances, necessary."

The private negotiations between the Democratic governor's budget office, leaders of the legislature's Democratic majority and leaders of the General Assembly's Republican minority are expected to last several days. Lawmakers will be addressing the budget deficit during a special session that begins Dec. 19.

On Friday, Malloy proposed a "road map" of $220 million in spending cuts he believes can be made, including $63.6 million at the Department of Social Services and $13.6 million at the Department of Education.

Malloy on Monday denied claims by Republicans that tax changes in the "road map" that would collect an additional $22 million from businesses qualify as tax increases.

Last month, the governor announced an additional $170 million in cuts he was making across state government on his own.

At the Bond Commission meeting, Republican lawmakers questioned Deputy State Treasurer Christine Shaw about a $550 million temporary line of credit the state is getting in case the government needs cash to pay its bills.

Shaw said the credit deal with J.P. Morgan was expected to be finalized Monday or Tuesday, but state officials have no plans to use the money. She said the credit line at this point is only a precautionary measure.

The only bond proposal to face opposition Monday was a plan to give four companies loans and grants totaling $23.5 million to relocate or maintain operations in Connecticut and create new jobs here. Two Republicans on the commission, Sen. Andrew Roraback of Goshen and Rep. Sean Williams of Watertown, voted against the plan, while eight other members voted in favor.

"I don't think government should be propping up businesses the way that we're doing," Williams said.

"We're not doing what other states are doing, which is reducing the tax and regulatory burdens on businesses to invite them to create their own wealth here. All we're doing is transferring wealth from one sector to another, and I just don't think that's government's role."

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