Connecticut Gov. M. Jodi Rell last week announced that the state will seek spending cuts and hiring freezes as opposed to tax hikes to help address a projected $145 million deficit in the $18.4 billion fiscal 2009 budget, which began July 1.

The gap is due in part to underperforming tax revenues. The state budget office now expects sales-tax receipts to be $81.5 million less than previously anticipated, while personal income tax receipts could drop by $56.4 million for the current year. Officials now project anticipated business and real estate tax revenue to decrease by $78.9 million and $63.2 million, respectively. Gaming revenue from tribal casinos are expected to drop by $37.6 million.

Rell said that she does not favor raising taxes or tapping into rainy-day funds to help fill the shortfall and is asking state agencies for $140 million of spending reductions.

“Let me be crystal clear: I will not allow Connecticut to tax its way out of this year’s budget deficit,” Rell said in a prepared statement. “I will continue the hiring freeze, the out-of-state travel ban, and the other cost-saving measures I have implemented. And I will order further rescissions in the coming weeks to make additional spending cuts at state agencies.”

Connecticut carries AA ratings from Fitch Ratings and Standard & Poor’s. Moody’s Investors Service rates the state Aa3.

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