Malloy Says Budget Deal Unlikely; Democrats Disagree

Connecticut's state budget deficit problems got a little worse on Friday night and it appeared questionable whether a budget deal can be reached before the General Assembly adjourns.

Democratic Gov. Dannel P. Malloy called reporters to his office late Friday and said newly restarted budget negotiations with the legislature's majority Democrats are "hitting a wall" and an agreement looked unlikely. He said the plan the Democrats brought to the table still requires hundreds of millions of dollars in cuts before he'll sign it.

"There appears to be insufficient movement to get us to a budget that would address both the revenue and the expenditure side of the budget," Malloy said. "If nothing can be cut in the budget, then no budget can be cobbled together."

Malloy reiterated he does not support increases in taxes or fees, insisting that substantial changes are needed to address the state's "new economic reality" of slow economic growth.

Democratic leaders were still optimistic a deal with Malloy could be reached before Wednesday's midnight deadline. The new fiscal year does not begin until July 1.

"I wouldn't call it an impasse because we're really committed to this process and we're working hard at it," said Senate President Martin Looney, D-New Haven, who said the Democrats have made substantial cuts. "We want to keep negotiating and get a deal that the governor will sign.

Meanwhile, that job became a little more difficult on Friday. New state revenue estimates, released by the governor's and legislature's budget offices, show the current fiscal year is now projected to end June 30 with a $256 million deficit.

That's up from the $141.4 million deficit estimate released last week. That figure had come as a surprise because lawmakers just passed a bipartisan plan on March 29 to erase a $220 million budget deficit.

Meanwhile, the projected deficit for next fiscal year has grown from $922 million to $960 million.

"The problem just got a little harder," said Ben Barnes, Malloy's budget secretary, who blamed much of the problem on weakness in estimated personal income tax payments.

Budget staffs for legislative Democrats and Malloy, who've been at odds for weeks over how to solve the deficit problems, met privately on Friday to try to craft a potential Democratic budget for a vote. Democratic leaders suggested earlier in the day that a vote might be held Monday or Tuesday.

It's questionable whether the minority Republicans in the legislature, who've offered their own budget, will sign on to any final agreement.

Malloy has said he is willing to call lawmakers back to the state Capitol for a special session and vote on a plan before the fiscal year ends.

"If anyone needed any additional evidence that significant structural changes are needed in order to address the ongoing, 'drip, drip, drip' of deteriorating budget numbers, I don't know what it is," said House Minority Leader Themis Klarides, R-Derby, who contends the GOP's new budget would make such necessary changes.

Senate Minority Leader Len Fasano, R-North Branford, questioned the new revenue estimates, saying the problem is likely $40 million worse. He criticized the two budget offices for projecting "miscellaneous revenue" will be $40 million next fiscal year, a figure he said counts on money from legal settlements the state does not have yet.

"This consensus revenue is counting on money the state simply doesn't have," he said. "At best, this is a one-time revenue grab. At worst, this is an empty pot and a complete distraction from the real size of the problem we face."

Copyright AP - Associated Press
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