Gov. Rell Calls for ‘Painful’ Cuts, but No Tax Increases in Budget Proposal

Gov. Rell this week unveiled a second budget proposal that includes “deeper, more painful budget cuts” but as with her previous proposal, no tax increases.

The governor’s proposal downsizes state government, keeps the budget “within what people can afford” and preserves municipal aid to avoid local property tax increases. Her revised budget reflects a worsening economy that has led to more than 65,600 jobs lost and 4,000 business closed in the state.

“Connecticut residents cannot afford massive tax increases [and] Connecticut businesses cannot afford massive tax increases,” said the governor in her news conference announcing the budget.

CBIA President and CEO John Rathgeber applauded the governor’s actions. He said, “making state government more efficient and less expensive will help avoid tax increases and position Connecticut for a stronger economic recovery.

“And with neighboring states significantly raising their taxes,” added Rathgeber, “Connecticut would enjoy a competitive advantage in the region for new jobs.”

Said Gov. Rell, “When businesses look for a prime location to put down roots,” she said, “we want Connecticut to be the most attractive draw in the region.

Some of the highlights of the governor’s budget proposal:

• Fiscal 2010 spending is 1.4% below Fiscal 2009 levels
• Fiscal 2011 spending increases 2%
• 10 state offices and 70 boards and commissions are eliminated
• 10 boards and commissions are consolidated with other agencies
• An additional $650 million is cut from her prior budget in each of the next two fiscal years
• Municipal aid is maintained, and municipal binding arbitration is suspended for the next two years.

Budget negotiations with legislative leadership stalled this week and most observers anticipated a final budget agreement not being reached before the June 3 adjournment of the legislature. Another delay occurred when Democrats added an amendment to their budget proposal that would change how the state’s budget deficit is forecast.

The Democrats’ proposal includes more than $3 billion in tax increases over the next biennium and avoids making major reductions in state spending or significantly reducing the size of government.

Gov. Rell said that the people of Connecticut are counting on policymakers to both cut state spending “and to finish our business on time.”

Several statewide polls conducted this year by Quinnipiac University and Zogby International confirm that in this economic and fiscal crisis, Connecticut residents want to avoid harmful tax increases, preferring to see state government become smaller and more efficient.

At the same time, many employers have told state lawmakers that raising taxes and increasing workplace costs would push them past the tipping point of business survival.

Holding the line on taxes and making tough state budget decisions can make Connecticut more affordable for businesses, stimulate job creation and reverse the “brain drain” by persuading young college graduates to stay in Connecticut. “This is not economic theory—it’s economic fact,” said Gov. Rell.

For more information, contact CBIA’s Bonnie Stewart at 860-244-1925 or bonnie.stewart@cbia.com.