Connecticut Governor OKs Bill to Close $1.2B Deficit

Connecticut Gov. M. Jodi Rell signed a bill yesterday to close the current $1.2 billion deficit in the current fiscal year.

More than half of the gap-closing measure relies on federal stimulus funds and rainy-day funds.

"While Gov. Rell was disappointed the bill did not include a retirement incentive plan, the bill does make strides toward reducing the deficit," spokesman Adam Liegeot said in a statement. "It includes no tax increases, and it does not reduce funding for education or for job creation."

Rell had proposed an early retirement incentive plan intended to cut down on the size of the state's workforce without forcing layoffs, but that didn't make it into the final bill.

The gap-closing law relies primarily on $373 million of federal stimulus funds, $282 million from the state's rainy-day fund, and $281 million of revenue enhancements and fund transfers.

The revenue enhancements include a five-cent deposit on bottled water that is projected to raise $13 million annually. The measure includes $50 million of contract cancellations and $49 million of labor cost savings, and counts on $40 million of increased federal Medicaid funding.

Connecticut faces sizeable deficits in the next biennium. Rell's office projects deficits of $2.91 billion in fiscal 2010, which begins July 1, and $3.11 billion in fiscal 2011.

Last month the governor proposed an all fund operating budget of $18.85 billion for fiscal 2010 and $19.53 billion in fiscal 2011.

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