Democrats lukewarm on Rell budget proposal, but vague on their own plans

Legislative leaders were lukewarm at best Tuesday in their reception of Gov. M. Jodi Rell’s latest deficit mitigation plan, but they were even vaguer about when – or even if – they would adopt any plans to erase state government’s deficit before the regular General Assembly session ends on May 5.

“We’re intending to pass a budget out of committee, but that’s all I can tell you right now,” Rep. John Geragosian, D-New Britain, co-chairman of the Appropriations Committee, said.

“We’re certainly going to take a close look at the deficits,” said Rep. Cameron C. Staples, D-New Haven, co-chairman of the Finance, Revenue and Bonding Committee.

On paper, the legislature’s Democratic majority still has plenty of time to act. Both committees have more than four weeks before their respective deadlines to submit their portions of the legislative budget proposal for 2010-11. The first deadline for closing the $518.4 million deficit projected for this fiscal year is the end of the regular session about nine weeks from now. The final deadline is the last day of the fiscal year on June 30.

But realistically, both legislators and administration officials concede that if they are going to avoid borrowing to cover the latest deficit, they are just about out of time. That’s because any tax hikes or spending cuts ordered now would have less than four months to raise revenue or accrue savings before the fiscal year ends.

Given the current deficit, and the fact that the legislature’s Office of Fiscal Analysis is forecasting a $726 million gap for 2010-11, could the legislature adjourn without sending at least one bill to Rell to eliminate a combined shortfall topping $1.2 billion?

“It has not been decided,” Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, said Tuesday, dismissing speculation that Democrats are nervous about tackling the $1.2 billion problem because it would involve either huge tax hikes, deep spending cuts, or both – in a state election year. “When you look at the size of the deficits we’ve been looking at since last year it’s a challenge, even in a non-election year,” Williams said.

“We haven’t made any decisions yet,” House Speaker Christopher G. Donovan, D-Meriden, said, adding that generally, the legislature doesn’t allow government to open a new year with a budget projected to be in deficit. But that did happen in July 2008, when the state began its fiscal year with an $18.4 billion budget projected be about $119 million in the red.

Williams added that while he personally would like to see a plan to eliminate deficits for both this year and next adopted soon, “that’s something I really can’t predict.”

Part of Rell’s solution to close the $518.4 million hole in the current future involves raiding nearly $220 million in emergency reserve, or Rainy Day Fund savings, dedicated to the 2010-11 budget.

Both Geragosian and Staples said they wouldn’t rule out the option of a budget shift, but conceded that such a move only would reassign deficit problems, not solve them. “It doesn’t really fix anything,” Geragosian said. “But it might get a look.”

Rell’s budget director, Office of Policy and Management Secretary Robert L. Genuario, said entering the new fiscal year in July with a significant built-in deficit not only could create a serious cash flow problem, it also could harm Connecticut’s ability to borrow at low interest rates on Wall Street. “It would likely impact our credit rating,” he said. “The bond rating agencies would not look favorably on the state ignoring its problems.”

“It would be a disgrace and nothing more than an admission by the majority party that they know they screwed up and that they needed to get out of here without raising taxes or cutting spending so they could kick that can down the road and past the election,” added House Minority Leader Lawrence F. Cafero, R-Norwalk. “They could not do that without a lot of attention being drawn to them.”