Rell warns agencies to prepare for emergency spending cuts

Gov. M. Jodi Rell warned state agencies this week that she’s planning to use her authority to cut the state budget to eliminate the $45.3 million deficit projected for the current fiscal year.

Office of Policy and Management Secretary Brenda L. Sisco, the governor’s budget director, notified all departments that they would get just 75 percent of their allotments for the quarter that began this month now.

The remainder, minus any rescissions currently being prepared, would be provided within the next few weeks, she wrote in a memo.

“Governor Rell has been unequivocal in her direction that action must be taken to resolve this deficit, both to ensure that the state’s financial condition is sound as well as to facilitate a responsible transition to her successor in the coming months,” Sisco added.

The governor is empowered by statute to cut most agency budgets by up to 5 percent in a given fiscal year without legislative approval. Debt service and municipal aid are exempt. Other segments of the budget effectively are excluded as well, though not by statute.

Funding for unionized employees salaries and benefits normally is not rescinded, since the state has a contractual obligation to cover those expenses.

Cuts to social services and health care provided under the federal Medicaid system also are usually avoided. That’s because such programs operate under entitlement rules, meaning all applicants who qualify are entitled to services, regardless of whether state government has budgeted adequate funds to pay for them.

The governor has broad discretion over when to order rescissions. Spending can be rescinded under current law whenever “the governor determines that due to a change in circumstances since the budget was adopted certain reductions should be made.”

This fiscal year’s $19.01 billion budget, with most operating costs included in a $17.67 billion General Fund, is running $45.3 million in the red, a deficit of one-quarter of 1 percent.

Still, the budget has run into several hurdles since the fiscal year began on July 1.

The state Office of Policy and Management estimates state government will receive $193.4 million less federal stimulus aid than anticipated when 2010-11 budget was adopted in early May.

The spending side of the budget also is facing some early problems, with expenditures now expected to exceed approved amounts by $153.6 million, due largely to surging demand for social services.

Those two problems outstripped modest growth in income and sales tax revenues, leaving this year’s budget with a net deficit.

Rep. John Geragosian, D-New Britain, co-chairman of the legislature’s Appropriations Committee, declined to assess Rell’s decision to order emergency cuts now, adding he would wait to see the details. “It really depends on the amount of rescissions she orders and where she cuts,” he said.