In the face of a worsening financial crisis, Connecticut Gov. M. Jodi Rell warned residents on Monday about the implications of the state’s growing budget deficit, pledging that instead of raising taxes to balance the state’s budget, she will slash government spending.
In an unprecedented television address, the governor said the coming months will test the resilience of Connecticut residents, forcing everyone — including New Haven residents and local officials — to make difficult choices. “To be sure, there will be times of trial and tears in the weeks and months ahead,” Rell said, warning that “some of the cuts will be painful.”
Two days before she is scheduled to release her budget for the upcoming two fiscal years, the governor requested time from all the local television networks to address the state, a move she attributed to the severity of the economic turmoil. It was Rell’s first such speech since she took office in 2004.
In her speech, the governor compared the forthcoming cuts to those made by families across Connecticut.
“My budget does what your family budget does,” Rell said. “It pays for those things that we must have, and it sets aside those things that are nice to have but that we cannot afford to pay for right now. Families are making these same tough decisions every day — finding ways to cut back. State government must do the same.”
State Comptroller Nancy Wyman on Monday estimated the budget deficit for the fiscal year ending June 30 at a record $1.1 billion, or nearly 6 percent of the state’s $18.4 billion budget. The governor estimated that the state faces budget shortfalls of as much as $8 billion over the next two years.
As a result, Rell said her budget “calls for sacrifice,” and while she cautioned that such sacrifice won’t be easy, she pledged that all the cuts she will propose are necessary. But the governor did not go into detail on what those cuts will entail, and in telephone interviews, Democratic lawmakers were unanimous in their concerns about the possible consequences of her cutbacks.
“I was left wanting more,” state Sen. Toni Harp of New Haven said. “If it is a slash-and-burn type of budget, I am concerned about what it will take for the legislature to pass a budget that the governor would be willing to sign. I am wondering how we get out of here without raising revenue of sorts — even if we get all of the money from the proposed federal economic stimulus.”
Questions remain regarding the final outcome of the stimulus plan, which last week passed the U.S. House of Representatives over unanimous Republican dissent. At a news conference in New Haven on Monday, U.S. Rep. Rosa DeLauro said the stimulus would provide $6 billion in federal money to the state of Connecticut over the next two years.
“Ultimately, our success depends on looking beyond Democratic or Republican labels to get this done,” DeLauro told reporters. “My hope is that the Senate will come together — both sides of the aisle — and pass a bill that we can have on President Barack Obama’s desk by the end of next week.”
Nicholas Perna, a lecturer in the Department of Economics and a member of Rell’s economic advisory board, said that if the stimulus passes, it will be a boon to the state’s budget and could prevent cuts to some social services. Indeed, DeLauro said the state and federal governments must avoid cuts to vital community services at all costs.
“We have a responsibility to do everything we can to prevent further cuts to social services,” she said, “because this is the time when people can least afford to pay for these services.”
Speaking at the news conference with DeLauro, Perna said that if state lawmakers know federal money is coming, they can plan for it in the state’s budget and avoid cutting certain services. But in her television address, Rell cautioned against relying on Washington to solve all of the state’s problems.
“We cannot control what happens on Wall Street or in Washington,” she said. “But we can direct what actions we take here.”
Derek Slap, a spokesman for the state Senate Democrats, said Democratic leaders are adopting an open-minded consideration of the budget process.
“They feel the budget has got to take a balanced approach — you cannot balance it on the backs of the middle class,” he said. “Democrats are going to hold it up to the light and make sure it passes muster.”
Slap added that Democratic leaders see it impossible to successfully balance the budget without raising taxes.
James Amann, the former speaker of the state House of Representatives and a candidate for the Democratic nomination for governor in 2010, also suggested there would have to be tax increases included in the budget proposal and warned of the possible ramifications of cutting vital services. Amann also cautioned against possible cuts to Payment In Lieu Of Taxes funding to municipalities — money doled out to cities and towns to cover tax shortfalls from tax-free properties like universities and hospitals.
“Just as the federal government has the foresight to see that the states are in trouble, we need to have the foresight to see that our municipalities are in trouble,” Amann said. “We can’t just expect them to have balanced budgets when, at the state level, we cut funding.”
Harp echoed Amann’s warning about PILOT funding. Municipalities are out of luck if Connecticut does not pay at the state level, Harp said.
“Some municipalities, like New Haven and Hartford, have a lot of services that are state-funded or not-for-profit,” she said. “There has to be a way to offset the losses.”
Indeed, New Haven Board of Aldermen President Carl Goldfield said he was skeptical of the governor’s promises and the effects her budget plan might have on the Elm City.
“I haven’t seen any credible proposals for how you cut $1 billion out of a budget,” he said. “Nobody wants to hear about higher taxes, but I don’t know how you get that number without higher taxes. Optimism — just being happy — isn’t going to get her a billion dollars.”
New Haven Mayor John DeStefano Jr. shared Goldfield’s uncertainty about Rell’s pledge not to raise taxes.
“That’s certainly an admirable goal. As to whether they’re going to be able to do it, I’m not sure,” he said. “The governor did say that this is also a time of opportunity, so hopefully we’ll get some direction and change some things that have been in need of changing for some time.”
Goldfield said he was concerned municipalities will be shortchanged by Rell’s desire to balance the state budget.
“I’m assuming that a portion will come from state aid to towns and municipalities — if you’re talking about cutting the kinds of funds that she’s talking about, I can’t imagine that she’s decided to immunize aid to state and localities,” he said. “I’ll be curious to see what she proposes and how disproportionately it falls on us.”
In preparation, interest groups across the state are gearing up for what they believe will be a tough budget battle. The State Employees Bargaining Agent Coalition recently launched an ad campaign titled “In This Together,” emphasizing the important work of state employees in preparation for possible state cuts or layoffs.
Ben Stango ’11, the lobbying coordinator for the Yale College Democrats, said students have collected almost 400 letters from Elis addressed to the governor urging her not to cut funding for affordable housing. The letters will be driven to the state Capitol and delivered to the Governor’s Office in the next day, Stango said.
Rell will formally announce her budget to the legislature in an address at noon on Wednesday.
Harrison Korn and Martine Powers contributed reporting.