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Malloy signs budget, presses unions

Hartford - Gov. Dannel P. Malloy added his signature Wednesday to Connecticut's next biennial budget and said he's getting tough with state unions for the final $2 billion that's needed to balance it.

"I think that I'm in a position to ask more of my fellow state employees than any other governor in the nation," Malloy said after signing the two-year, $40.1 billion budget with a blue pen.

"We have looked at a balanced approach to getting through this crisis ... so if someone is going to ask more than someone is comfortable in giving, I'm prepared to be that person."

To close a $3.3 billion deficit in the next fiscal year, the budget enacts spending cuts and the largest dollar-for-dollar tax increase in Connecticut history. The tax increase - $1.4 billion in the first year starting July 1 and $1.2 billion in the second - is the state's biggest on an inflation-adjusted scale since former Gov. Lowell P. Weicker Jr. introduced the broad-based income tax in 1991.

"This deficit was too large to tax our way out of it and too large to cut our way out of it, and it had to be some mixture of the two," Malloy said.

Malloy is seeking $1 billion a year in savings and labor givebacks from state employees as part of his spending cuts. He said he expects "in excess of 4,000" layoffs if an agreement isn't reached with unions representing more than 40,000 state employees. The first layoff notices are ready to go out Friday. But he wouldn't specify whether the 4,000-plus number is a grand total or represents just the notices to go out Friday.

The governor's staff has said managers as well as rank-and-file workers would be affected. The budget sets a May 31 deadline for Malloy to submit to the legislature a revised plan if he doesn't obtain full concessions from the unions.

House members voted 83-67 late Tuesday to adopt Malloy's budget, with most Democrats in favor of the plan and Republicans in unanimous opposition. The Senate passed the budget with a 19-17 vote in a marathon session that began Monday and ended Tuesday morning.

Hours after the House vote, unions' spokesman Larry Dorman issued a statement on the ongoing talks between the Malloy administration and the State Employees Bargaining Agent Coalition.

"It's not fair or realistic to expect middle-class people who happen to work for the state to each cut $22,000 a year from our family annual budgets," Dorman wrote. "Especially when we, like all middle-class families, are already paying 10 percent of our income in state and local taxes while millionaires are only paying 5 percent of their income, and some of our largest corporations are paying little or no taxes at all."

Malloy sat down with newspaper publishers and editors in the Governor's Residence Wednesday, noting he will meet with legislators in the next 24 hours to discuss options if the concessions fail to materialize.

"There's a sense we're running out of time," he said.

Malloy told the publishers and editors that he would not increase taxes any further in the budget plan and would instead cut spending. He did not rule out cuts in aid to cities and towns, but said, "That's one of the last things I'll agree to do." He said his staff has identified what can legally be cut from the budget.

"Everything that is not restricted by law or agreement ... is on the table," Malloy said.

Benjamin Barnes, the governor's budget chief, met in the afternoon with state agency commissioners and human resources staff to prepare them for possible layoffs. The private meeting was held in a large conference room at Rentschler Field in East Hartford, staff members said later.

The budget signed Wednesday increases taxes on income, property, corporations and retail sales. It introduces new taxes on goods and services ranging from cigarettes and alcohol to manicures and yoga.

The budget also ends the tax exemption on clothing and shoes under $50, just in time for a new 6.35 percent sales tax rate.

Finance officials project a surplus of $369 million in the new budget's first year and $635 million in the second. Malloy told reporters the surplus must go to debt repayment.

"The people of Connecticut … are looking forward to having a government that owns up to its obligations and begins the process of paying those down," he said.

j.reindl@theday.com

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