House Speaker Joe Aresimowicz and Minority Leader Themis Klarides earlier in the year.
House Speaker Joe Aresimowicz and Minority Leader Themis Klarides at Thursday’s news conference.
House Speaker Joe Aresimowicz and Minority Leader Themis Klarides at Thursday’s news conference.

Leaders from both parties in the House of Representatives said Thursday they are wary of Gov. Dannel P. Malloy’s proposal to withhold $19 million in outstanding municipal aid to help close a last-minute state budget deficit.

But House Speaker Joe Aresimowicz, D-Berlin, and Minority Leader Themis Klarides, R-Derby, said they remain committed to negotiations with the administration to mitigate the $390 million hole in the current fiscal year.

“It’s almost June. Where are they [cities and towns] supposed to get that money” if Connecticut withholds it? Klarides asked.

“We can’t promise them one thing and then pull the rug out from underneath them,” Aresimowicz said.

Democratic and Republican House leaders met with reporters before Thursday morning’s House session to discuss the deficit-mitigation plan Malloy unveiled Wednesday.

The governor and the General Assembly are scrambling after watching state income tax receipts in April fall about $400 million below expectations.

But with just seven weeks left before the fiscal year ends on June 30, Malloy warned lawmakers Wednesday that options are very limited if Connecticut is to avoid borrowing to cover its operating debt.

The plan “requires actions we would all prefer to avoid,” Malloy wrote in a letter to leaders. “However, I believe we all can agree that our constituents, our taxpayers, our creditors and our employees all expect that we will decisively address our current-year problem and turn our attention to the greater challenges we face in the upcoming biennium.”

“Once again, the governor has a clear, detailed proposal on the table for meeting our fiscal challenges head on,” Malloy spokeswoman Kelly Donnelly said. “If House leaders have a better path toward closing the current year shortfall at this late stage in the year, we look forward to seeing their plan in detail. What we know for sure is that Connecticut cannot spend more money than we have. If we pretend our fiscal problems can be solved without reducing town aid or cutting programs, we simply aren’t being honest with ourselves or with our constituents.”

The governor unveiled a plan Wednesday that relies on one-time revenue sweeps, dozens of small agency cuts, and draining the state’s reserves to close the roughly $390 million gap in current state finances.

It also would cancel the $19.4 million payment still owed to towns this fiscal year. This is part of a larger $58 million grant program which provides communities with a share of the video slot machine proceeds the state receives from the two casinos in southeastern Connecticut.

Aresimowicz and Klarides heard concerns earlier Thursday morning from the dozens of mayors, first selectmen and town managers during a Capitol forum hosted by the Connecticut Council of Small Towns.

Goshen First Selectman Robert Valentine said communities that have worked hard to manage their budgets and build reserves are paying for state government’s fiscal troubles. Also, many towns already have adopted their municipal budgets for next year.

“I guess we feel as though we are being penalized,” he said.

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Keith M. PhaneufState Budget Reporter

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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