Connecticut Gov. M. Jodi Rell said she will allow the $37.57 billion budget passed early yesterday by the Democratic-led General Assembly to become law without her signature.

"I will not veto the entire budget," the Republican Rell said in a press release. "However, I will not sign it into law, because I do not believe in this budget. I do not want, by my signature, to put a stamp of approval on their spending, their inability to make cuts or their levels of borrowing, revenues and taxes."

Rell used a line veto on $8 million of spending she said was added at the last minute to the budget covering the fiscal 2010-11 biennium that began on July 1.

In July, the governor had vetoed an earlier budget but last week signaled she was willing to compromise on raising personal income taxes on the wealthiest residents, but at the same time sought to eliminate the state inheritance tax and to cut sales taxes. She also increased the level of deficit borrowing through securitization from earlier proposals to $1.3 billion.

Democrats approved the securitization which is likely to include lottery bonds though the budget bill gives the state treasurer and secretary of the office of policy and management flexibility to work out the details.

In addition to the budget, the assembly approved the sale of $950 million of economic recovery notes, which the state plans to begin selling this year to close a deficit in fiscal 2009 which has already ended. Should the state's revenue situation improve, unappropriated general fund surpluses must be used to pay off the notes and securitization bonds prior to their maturity, according to an amendment passed with the budget.

The budget bill cuts sales taxes to 5.5% from the current 6%, as Rell proposed, but not until January and the cut can be rescinded if revenue continues to fall. The bill also included a 1.5 percentage point increase to 6.5% on personal income taxes for single filers earning over $500,000 and $1 million for joint filers.

The adoption of the budget will leave Pennsylvania as the only state in the nation without a state budget.

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