State lawmakers in Hartford are working against the clock to devise plans that will close the state’s budget gaps for this fiscal year and next and that will gain the signature of Gov. Rell.

One legislative plan faltered last weekend even after a positive vote in the Senate. The proposal is expected to be revived next week in the House—despite apparently not enough support to overcome an expected veto by Gov. Rell.

This week, Gov. Rell used her executive authority to erase $157 million from this year’s budget shortfall. Because of the state budget deficit, and under an agreement reached last year with state employee unions, the governor is deferring payment of $100 million to the state employees’ pension fund.

In addition, she is making $12 million in state spending cuts, and the state is getting increased federal aid. Most of the more than two dozen spending cuts the governor made are reductions she recommended in her latest deficit mitigation plan; several other cuts were also part of the deficit mitigation bill the state Senate passed last week.

Attempts to solve the budget crisis have so far have burned up a lot of energy. The Senate debated all night last Friday into Saturday morning and passed a deficit mitigation package that included a combination of tax increases, budget cuts and increased federal dollars.

But the vote to approve the measure—21-15, with three Democrats and all Republicans opposing—was not strong enough to overcome the veto that was promised by Gov. Rell.

Subsequently, despite the vote and promise of a veto, talk at the Capitol is that the House has decided to take up the proposal on Wednesday.

In another effort made the week before, the legislature’s Appropriations Committee approved a proposal to increase state spending in fiscal year 2011 by $350 million and push the expected budget gap to more than $1 billion. But that proposal was approved only by a close vote and over bipartisan objections; it is not expected to advance.

The latest state budget deficit projection is more than $500 million this year and $726 million in fiscal year 2011. While closing those gaps will be difficult enough, the deficit estimates for the three years that follow fiscal year 2011 are about $3.8 billion each.

It’s clear that cobbling together the usual patchwork of higher taxes, borrowing and waiting for more federal dollars won’t be nearly enough to tackle the deficit monster.

What’s needed is a major restructuring and downsizing of state government that will bring about a streamlined and more effective delivery of services at a more affordable cost to taxpayers.

Policymakers need to deal with Connecticut’s fiscal crisis without resorting to tax increases, more borrowing and postponing costs—strategies that will only stop our expected economic recovery in its tracks.

Long-term solutions are needed. These include changing the way the state approaches long-term healthcare, reforming our prison system to expand alternatives to incarceration, and enlisting nonprofit agencies to deliver quality social services more cost-effectively.

With slightly more than a month to go in the 2010 session, time is growing short. And employers and employees alike are looking to policymakers to make the right decisions that will put Connecticut on more solid fiscal footing and grow our economy again.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.