Connecticut Gov. Dannel Malloy signed a deficit-mitigation bill that the General Assembly passed in a special session last week.

The plan, combined with spending cuts Malloy announced last month by invoking his rescission authority, will cover almost all of the $365 million deficit that the governor's administration was projecting.
Malloy's unilateral cuts were announced at $170 million, although nonpartisan fiscal analysts said the net reduction was only $113 million.

Malloy signed the bill Monday.

The deficit exceeded 1% of total general fund appropriations, requiring Malloy by law to submit the deficit-reduction plan. The House of Representatives passed the plan 140 to 3, while the Senate approved it 31 to 3.

Sen. Joe Markley, R-Southington, voted against the bill, saying the budget cuts place undue pressure on hospitals and other nonprofits. "Hospitals are on the edge and struggling to get by," he said.

He also objected to a provision that authorized $10 million in bonding to cover spending from the state's stem-cell research fund. "I think anything that bonds effectively current expenses is a bad idea," said Markley.

But Sen. Toni Harp, D-New Haven, stressed urgency.

"Making meaningful adjustments later in the fiscal year becomes more difficult because there's less time for them to add up, so we were compelled to act on this mitigation plan sooner rather than later," said Harp, who is deputy president pro tempore.

The budget debate followed a ceremony honoring the shooting victims at Sandy Hook Elementary School in Newtown. Some leaders said bipartisanship reigned after the tragedy. "If it wasn't for Newtown I don't know if we would have reached a compromise," House Republican Leader Larry Cafero of Norwalk told reporters.

The state also faces a shortfall of roughly $2 billion over the next two fiscal years. The legislature will reconvene on Jan. 9.

By law, the governor and General Assembly pass a two-year budget plan in odd-numbered years, then modify it along the way.

Malloy recently authorized Treasurer Denise Nappier to tap a credit line of up to $550 million for operating expenses if necessary. Nappier told the governor that the state's common cash pool had a negative balance, which forced the temporary transfer of $366 million from bond fund investment accounts.

Moody's Investors Service called the new credit line a credit negative "because it reflects the state's liquidity and budget challenges."

Moody's rates the state's general obligation bonds Aa3, having lowered them from Aa2 last January, while Fitch Ratings, Standard & Poor's and Kroll Bond Rating Agency each rate them AA.

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