After three long days of closed-door negotiations, Democratic legislators and Republican Gov. John G. Rowland announced Thursday night they had reached a deal on how to narrow Connecticut’s $300 million budget deficit.
The tentative agreement, which would reduce the deficit by about $200 million, calls for a mixture of last-minute borrowing and cuts in the budgets of several state agencies.
Votes on the plan are expected in the House of Representatives late Thursday and in the Senate on Friday.
The deal would not cut funding to municipal services or state education aid — something that had previously worried local politicians. When Rowland called the special session to address the deficit last month, he had originally threatened to cut municipal aid and lay off state workers.
Jim Foye, a spokesman for New Haven Mayor John DeStefano Jr., said news of the agreement was a relief.
“Obviously the city of New Haven, like other municipalities, was worried about possible cuts in state aid,” Foye said. “We’re glad that a budget deal has been reached in that sense.”
State Sen. Martin Looney, a New Haven Democrat, said New Haven’s primary sources of state funding — including the Payment in Lieu of Taxes program, or PILOT — would remain intact under the proposal. But Senate President Pro Tem Kevin Sullivan said last night Rowland did not agree to the deal until Democrats took about $50 million in future school construction funding off the table.
It was unclear last night whether that decision would affect New Haven’s massive ongoing school construction program.
Looney, who challenged DeStefano in a bitter Democratic primary race this year, said the deal legislators reached yesterday was very similar to the plan they had proposed Wednesday under the threat of Rowland’s veto.
“The deal reflects basically an agreement that was pretty close to what was discussed yesterday,” Looney said.
The plan Democrats proposed Wednesday would have reduced the deficit by $240 million.
Rowland’s budget chief, Marc Ryan, who had criticized Wednesday’s proposal, said last night the new plan was acceptable.
“Are we totally satisfied? No,” Ryan said. “We may take further action down the road.”
Looney said the agreement reached yesterday calls for a one-year postponement of plans to phase out the state’s inheritance tax. The plan will also cut funding to some state agencies that are under-budget for the year.
“It’s going to be from various agency accounts — money that might have been reserved for equipment or other purposes but was never spent,” Looney said. “Some of that will wind up being postponed.”
The continuance of the inheritance tax would not have an impact on the state’s revenues until the 2002-2003 fiscal year.
The current fiscal year ends June 30, four months after the Connecticut legislature begins its regular session in February.
Looney said deferring some decisions until February was prudent.
“In February — we will have better idea of the state of the economy,” he said.
Until February, Rowland still retains the authority to make other budget recisions, Looney said.
When the session meets in February, Looney said he will push forward with his proposal to raise state cigarette taxes — a plan that could help to avert future budget shortfalls. Under Looney’s plan, the state would get an estimated $110 million in revenue by raising the tax from 50 cents to a $1 per pack of cigarettes.
–The Associated Press contributed to this story.