Governor Rell Announces 2ND Deficit Mitigation Plan,
Calls Special Session for January 2

Governor’s Plan Erases $356 Million Budget Gap
 with No New Taxes; Leaves Rainy Day Fund Intact

            Governor M. Jodi Rell today announced her new plan to eliminate Connecticut’s current budget shortfall by cutting spending, redirecting revenue from special accounts to the General Fund, bringing additional efficiencies to state government and collecting additional revenue owed Connecticut by the federal government. The plan requires no new taxes, no employee layoffs and leaves the state’s $1.4 billion budget reserve fund (Rainy Day Fund) intact.

            Governor Rell is calling the General Assembly into special session on Friday, January 2, to enact the plan.

            “The national recession is an ongoing challenge for Connecticut’s government, just as it is for our families and businesses,” Governor Rell said. “Government spending must reflect economic reality, and that means the tough choices families are making can no longer be avoided by the Legislature. We must attack the spending side of this equation, because raising taxes in the middle of a recession is the worst decision we could make.

            “Some will question why I am calling the Legislature into session five days before the next regular session is slated to begin,” the Governor said. “The answer is as simple as it is stark: We cannot put off reality. We cannot wait to take action. The Legislature – the sitting Legislature – needs to take action.

            “Every day the economic news gets worse,” Governor Rell said. “One need only scan the news in recent days: Layoffs at the Stanley Works. One-day furloughs at Pratt & Whitney. Two community newspapers in trouble and the Tribune Co. in bankruptcy court. Every day we sit and wait makes the budget situation worse. Lawmakers MUST address the budget deficit now. We literally cannot afford to wait.”

            The Governor’s plan calls for further spending cuts, including $7.2 million in a third round of rescissions. Governor Rell has already ordered two rounds of budget cuts – the first a cut of $150 million and, most recently, a cut of $34 million.

            The state has also identified revenue due to the state from the federal government for Medicaid billing for private providers serving clients of the Department of Developmental Services.

            The plan transfers $35 million set aside during the August special session in case Congress did not provide enough funding for low-income heating aid. Later Congress appropriated $5.1 billion in supplemental federal funding for the program, so the $35 million in state funding is no longer needed.

            The Governor’s plan also transfers $185.8 million from special accounts within state government into the General Fund for operating expenses. These accounts contain funds well in excess of what they are estimated to actually require.

            Earlier this year, Governor Rell took a number of steps to rein in state spending and keep last year’s state budget “in the black.” State agencies were required to cut their gasoline use and ordered to cease all but the most essential spending. The Governor also ordered a hiring freeze and banned out-of-state travel paid for with state funds.

            Those belt-tightening measures helped the state finish the budget year that ended June 30, 2008, with a surplus of $84 million. The Governor proposed using the entire surplus for winter heating assistance and developed plans to provide heating assistance to low and middle income Connecticut families, senior citizens, nonprofit service providers and to help cities and towns with heating costs for school classrooms.

            “This is the second plan I have put forward and the third round of cuts I have made to eliminate the deficit we face for the current fiscal year, and once again I am proposing to do it without raising taxes, tapping our ‘Rainy Day Fund,’ cutting state employees or increasing the burden on the hard-pressed families and businesses of Connecticut,” Governor Rell said. “It is vital that lawmakers join me in solving these problems now, while they are still at a manageable scale, rather than waiting until they have grown even worse and require far more drastic – and consequently far more painful – measures.”