November 24, 2008
Conn. lawmakers tackling $300M budget deficit
Connecticut lawmakers returned to the state Capitol on Monday to tackle a growing state budget deficit estimated at more than $300 million for the current fiscal year.
They began meeting behind closed doors late in the morning and were expected to approve a plan in a special session later in the day. Early indications were that whatever they passed would not cover all the red ink for fiscal year 2009, which closes out on June 30.
The projected $302 million deficit has grown by over $250 million since Gov. M. Jodi Rell first proposed her mitigation plan last month, lawmakers estimated. Like many other states, Connecticut's revenues have dramatically slowed in recent months.
"I'm hoping we'll come together after Thanksgiving," Senate Minority Leader John McKinney, R-Fairfield, said. "We have to do something."
Monday's special session was a warm-up for legislators, who are scheduled to convene the next regular legislative session in January when they must deal with a projected two-year, $6 billion deficit.
"This is almost easy, and I don't say that lightly," McKinney said of Monday's budget-cutting effort.
Leaders of the Democratic majority have said they support most of the Republican governor's plan to reduce the 2008-09 deficit, which includes budget cuts and delaying spending on several programs.
There's also a proposed program to encourage people to pay their delinquent taxes, estimated to generate $40 million.
Some lawmakers opposed Rell's plan to take control of an estimated $28 million in unclaimed bottle deposits that currently go to beer and soda distributors. Some fear that could lead to job cuts in the beverage industry. The proposal has been beaten back by the distributors' lobbyists for many years.
Supporters of the idea have said it's only fair for the state to recoup the unclaimed nickel deposits, just like other unclaimed assets such as old life insurance policies and savings accounts. It appeared doubtful that Rell's bottle deposit proposal would come up for a vote Monday.
"We are desperate for the cash and there's no reason why we shouldn't have done it years and years ago," said Betty McLaughlin, executive director of the Container Recycling Institute.
Struggling bottle redemption centers are hoping some of that money can be used to increase their handling fees. Connecticut last increased the handling fee that redemption centers receive for an empty bottle of beer from 1 cent, to 1.5 cents in 1986. The 2-cent fee for a soda can or bottle has been in place since 1978.
John Ancheff, owner of DJ's Redemption Center in Waterbury, said he's not sure how long he can remain in business.
"At the current rate, I don't know," he said. "It's month to month"
Rell's proposal to change state retiree pharmacy benefits also faces some opposition. It is supposed to save $14.5 million but needs the consent of the unions and the legislature.
If lawmakers don't make enough cuts or come up with additional revenue before the fiscal year ends on June 30, the remaining deficit will automatically be covered by part of the state's $1.4 billion rainy day fund, said Rep. Cameron Staples (nasdaq: SPLS - news - people ), D-New Haven, co-chairman of the tax-writing committee.
"Obviously we want to do as much as we can because the rainy day fund is needed next year," he said.
http://www.forbes.com/feeds/ap/2008/11/24/ap5736123.html
