As Connecticut lawmakers met yesterday on the day before the end of the 2010 legislative session, it was unclear whether there was a deal to close the state’s $700 million fiscal 2011 budget gap.
“A deal is more or less imminent, ” said Jeffrey Beckham, spokesman for the governor’s Office of Policy and Management. “We’re going to be in balance for ’11 and there’s a number of details in there as to how we get there, but most of it is still confidential.”
Beckham said Gov. M. Jodi Rell had sought to cut spending, reduce borrowing, and avoid taxes. “To the extent that there’s some additional spending in what we wind up doing, that’s something she’s had to sort of compromise on,” he said.
Spokespersons from the House and Senate did not comment by press time.
Better-than-expected revenue figures last week have offered a dose of good news to lawmakers. After months of declining employment and income tax collections, things are going back up, Comptroller Nancy Wyman said in a press release Saturday.
The state gained about 6,400 jobs in the first quarter of 2010 and income tax collections increased last month by 2.4% compared to April 2009. Better revenues, stimulus funds, and an approximately $500 million deficit-mitigation package passed last month will combine for a $105 million budget surplus at the end of fiscal 2010, according to the comptroller’s office. The governor and legislature’s consensus forecasting put the surplus at $140 million.
“This surplus is mainly produced by federal stimulus dollars, deferral of payments to the pension fund, and one-time transfers of money from accounts including the rainy-day fund,” Wyman said in the release. “While this modest economic turnaround is certainly good news, it does not lessen the fiscal challenges that the state will face in the coming years.”
Last month an agreement was passed and immediately signed into law to address fiscal 2010’s deficit. The largest items in that measure were the deferral of $100 million of state employee pension contributions and the use of $239 million of rainy-day funds that had been scheduled to be drawn on in fiscal 2011. In September, the Democratic-led General Assembly passed a $37.57 billion biennial budget, which Rell, a Republican, allowed to become law without her signature.
Also on Saturday, the General Assembly passed a version of one of Rell’s budget proposals to cancel or reduce funding for certain capital projects. The bill, SB 25, slashes $480.5 million from capital projects that were to be financed with general obligation bonds. The reduction would affect a wide swath of sectors, including economic development, environmental issues, education, social services, and transportation. The bill would also add $58.6 million of bond-financed capital projects, including bridge and roadwork in Bridgeport, Hartford, and New Haven.
Beckham said in an e-mail that the bill, which had not been signed by press time, would allow the state “to get further under our statutory bond cap and improve our bonded indebtedness numbers.”
Connecticut has $10.9 billion of debt outstanding and a statutory debt cap of $17.48 billion, which includes planned but unissued debt.
The fate of a plan to securitize an as-yet-undetermined revenue stream for $1.3 billion was unknown at press time. Beckham said the improved revenue picture had reduced the amount needed to be securitized to somewhere close to $1 billion. Rell and the General Assembly disagreed on what revenue source should be used for the securitization, with Rell looking to gambling and legislators looking to utility bill surcharges. .
It was not clear whether securitization will be included at all. Last week, Rell told reporters at a meeting in her office about a proposal to create a quasi-public entity to take over operations at Bradley International Airport in Windsor Locks.
“There wasn’t a whole lot of detail on it,” said Rell spokesman Rich Harris. The plan would include a deficit borrowing secured by a surcharge on electric bills, energy conservation funds, and money generated at the airport, he said.