Moderate Democrats urge leaders to close budget deficit without more borrowing

An appeal from moderate Democrats for decisive leadership to close the state budget deficit left some lawmakers questioning Tuesday whether a rift has opened within the General Assembly's majority party.

A coalition of four senators and 11 representatives sent a letter to party leadership urging immediate action to close the $518.4 million deficit for 2009-10 without resorting to the long-term financing employed last year.

The group also suggested in their letter to Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, and House Speaker Christopher G. Donovan, D-Meriden, that they use Republican Gov. M. Jodi Rell's recent deficit-mitigation plan as a starting point for renewed talks.

"We can no longer wait or hope for a miracle on Capitol Avenue," the 15 legislators wrote. "Times are tough."

"While not perfect, it is a place to begin our dialogue," the group added, referring to the governor's plan. "While no solution is easy or without pain, we all have a responsibility to the taxpayers of this state to get our fiscal house in order."

Rell's plan, however, relies in part on $140 million in cuts from a wide array of social services, other programs and special funds this fiscal year. It also would raid nearly $220 million in revenues from next year's budget and offset that transfer with a new tax on hospitals, added federal aid, and an additional $45 million in cuts aimed at town grants in 2010-11.

Many of those cuts, particularly those targeting social services and town aid, are expected to draw strong opposition in the House of Representatives, where Democrats control 114 out of 151 seats. But Sen. Robert Duff, D-Norwalk, one of the 15 lawmakers who signed the letter, said House Democrats have to begin accepting cuts they normally wouldn't consider.

"There are certain parts I would have had to hold my nose about, but I would have voted for the governor's plan," Duff said, adding the state government must resolve the current deficit so it can move on to larger shortfalls on the near horizon.

Legislative analysts estimate that the preliminary $18.93 billion budget adopted for 2010-11 is $726 million in the red, and that 2011-12 faces a built-in shortfall of $3.9 billion.

That latter forecast has grown by $700 million since November, and Rep. Tom Reynolds, D-Ledyard, another signer of the letter, said voters know that state officials worsened the crisis by avoiding tough choices last year. "It was our refusal to put in place long-term structural reforms that made this worse," he said. "And there is still not a consensus at the Capitol that we're in a major fiscal crisis.

Other Democrats besides Duff and Reynolds who signed the letter include: Sens. Gayle Slossberg of Milford, Joan Hartley of Waterbury and Paul Doyle of Wethersfield; and Reps. Linda Schofield of Simsbury, Kim Fawcett and Thomas Drew of Fairfield, Steve Mikutel of Griswold, Terry Backer of Stratford, Elizabeth Esty of Cheshire, John "Corky" Mazurek of Wolcott, Edward Moukawsher of Groton, Chris Wright of Bristol, and Chris Perone of Norwalk.

With less than four months left before the fiscal year ends on June 30, state government is running out of options to avoid its second consecutive year of major borrowing to cover operating expenses. The legislature and Rell agreed to bond just over $1 billion this past summer to close the books on the 2008-09 fiscal year.

The legislators' letter is "commendable and should be refreshing to state taxpayers," Rell said in a statement issued Tuesday by her press office. "I pledge to work with them immediately to get our budget problems solved.  I wholeheartedly agree that this deficit must be eliminated now and that borrowing more money - essentially putting the bill on the state's credit card for the next generation to pay off - is not the answer."

But the prospects of consensus on a deficit-mitigation plan appeared dim in several legislators' views Tuesday.

Donovan and Rep. John Geragosian, D-New Britain, the House chairman of the Appropriations Committee, pledged to work toward common ground, but also warned most House Democrats are opposed to further cuts to social services or town grants.

Rell vetoed a Democratic deficit-mitigation bill in December that would have canceled a Jan. 1 reduction in the tax on wealthy estates. That change, which would have meant $70 million more in annual revenue starting in 2010-11, "is the first place to start," Donovan said.

The governor has repeatedly opposed efforts to reverse that tax break. And Duff noted that it would take far more than an estate tax increase to eliminate the deficit with more revenue, adding he believes more than half of the 24 Democrats who control the 36-seat Senate are leery of that option.

Williams, who would have to broker any deficit-mitigation bill between the two chambers, refused to say Tuesday whether he would allow a vote on deficit-reduction plan heavy with spending cuts without House Democrats' agreement. "That's a hypothetical and it's premature," the Senate leader said, adding he remains optimistic a compromise can be struck before April. "I don't think we're at an impasse."

Privately, though, several Democratic legislators said it would be near-impossible to strike a deal unless Rell relents on the estate tax. Sources also said that with minority Republicans continuing to speak out against town aid cuts, it would be hard to gather Democratic votes in a legislative election year for any plan that targets towns.

House Minority Leader Lawrence F. Cafero, R-Norwalk, said the Democratic majority is stuck, and the signs of that intra-party disagreement showed as last year's budget debate dragged on into early September.

"Why do you think we were where we were in June, July and August?" he said. "The reason the Democrats could not ignore the governor and pass their own budget with numbers that would override any veto is that they were at an impasse then."

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