Lawmakers Resume Talks,

Still Pessimistic About Deal

By Susan Haigh

Associated Press

HARTFORD –– State lawmakers resurrected the faltering state budget talks Tuesday, but acknowledged it is questionable whether an agreement can be reached before the new fiscal year begins on July 1.

Both Democrats and Republicans said they are far from a deal on a two-year budget that would cover the $1 billion deficit projected for the new fiscal year. The deficit is the result of dwindling tax revenues in the sluggish economy.

“We’re still apart,” said House Minority Leader Robert Ward, R-North Branford. “I wouldn’t characterize it in miles but I’m not saying we’re in feet yet.”

Budget negotiations appeared to fall apart Monday following a day of discussions at the governor’s residence. The two sides accused each other of not holding up their ends of the bargaining.

By Tuesday morning, however, they agreed to return to the table. Legislative leaders and Republican Gov John G. Rowland met at the governor’s state Capitol office for nearly two hours. Democrats said they presented Republicans with approximately $237 million in spending reductions, about $90 million of which was settled on in earlier negotiations.

The Republicans have agreed to about $250 million in tax increases –– essentially rolling back the $500 property tax credit on the income tax to $170. Democrats dislike that proposal because they say it disproportionately hurts middle class taxpayers. About 86 percent of the credits go to families earning less than $100,000 annually.

In fact, some Republicans do not like the idea either. They have opposed earlier efforts to cut the credit from $500 to $425.

Senate President Pro Tem Kevin Sullivan, D-West Hartford, said even if Democrats swallow the property tax credit rollback, the two sides are still at least $200 million apart. Plus, he acknowledged that Republicans do not necessarily agree with the cuts Democrats have proposed.

Mr Sullivan said it is hard for him to imagine that state lawmakers will be able to vote on a budget deal before June 30, the final day of the current fiscal year.

“It’s a Herculean challenge ahead of us,” he said.

Gov Rowland was also pessimistic about reaching an agreement in time. He said one must be settled by Friday to schedule a vote for Monday.

It was unclear whether any agreement reached by the leaders would even pass the full General Assembly, controlled by Democrats. Rank-and-file legislators have been kept mostly out of the negotiating process and will likely oppose certain spending cuts or tax increases.

Many Republicans, for example, believe they stepped up to the plate in February and voted for about $650 million in tax increases to address the current fiscal year’s deficit. They are not eager to vote for another budget that raises taxes unless Democrats reduce spending significantly.

Some Democrats are still hoping to find funds to replenish some spending cuts made in February, such as a health insurance program for poor adults that was eliminated.

If no new budget is approved by Monday, the legislature must pass a so-called continuing budget resolution to keep government running. Gov Rowland said he and his budget chief, Marc Ryan, are working on a plan but did not provide any details.

Gov Rowland said he has no choice but to begin piecing together a proposal to fund essential state services over a set period of time, possibly a week or two.

“I have no delusions this is going to come together magically by Monday,” he said of the budget talks.

Given the battle over reaching a bipartisan deal on the regular budget, Gov Rowland said there could be a fight between Republicans and Democrats over the continuing resolution. He said there could be disagreement about what should be considered an essential state service and what the timeframe should be.