Blooms of Hope?
Photo by Steve Kotchko
Posted 4/20/09
Democratic and Republican lawmakers last week continued bashing each other’s proposals for writing a new two-year state budget and tax package, and tackling the multi-billion dollar state deficit. Perhaps in an effort to counter the bickering, Republican Gov. Jodi Rell began a news availability last Friday by invoking some flower power.
“We’re finally getting to see spring,” said the governor, as temperatures wafted up toward 70 degrees. “Near the entrance to the Capitol, you can see all those beautiful tulips finally coming out,” she said, concluding: “I think it is a sure sign that there is hope on the horizon.”
Rell wants to convey some optimism as lawmakers and budget experts begin the first wave of serious budget negotiations this week. It will start at a relatively low level, involving Democratic chairs and ranking Republican members from the legislature’s tax and budget writing committees, plus representatives from the Office of Policy and Management, the governor’s budget agency. Rell herself will not be involved at this exploratory stage.
The governor diplomatically said all three budget plans now on the table should be given consideration. This includes Rell’s own “no new taxes” budget delivered in February, the Democratic majority’s plan, which they claim is more realistic and does include tax hikes, and a GOP legislative plan just unveiled last week, which includes no tax hikes, but does propose “privatizing” many state services to save money, and suggests selling off certain state properties.
Continuing her optimistic tone, Rell told reporters that after months of serious concern about state revenues, the latest information indicates that while income tax revenues are down, the state sales tax, casino revenues, and withholding tax estimates are doing better than forecast in some gloomy earlier forecasts. It is expected that when budget talks begin this week, state officials will have a more formal estimate on revenues based on data amassed after the April 15 tax filing deadline.
The governor also expressed hope about ongoing negotiations between her administration and state employee labor unions to achieve more than $600 million dollars in labor concessions to ease the deficit crisis. Rell said if a final deal is achieved, there could be significant long-term savings for the state. State employees want job security in exchanges for concessions on wages and benefits. Rell understands that and told reporters: “It is my sincere hope that layoffs can be avoided—absolutely.”
It’s clear Rell wants to keep all options open at this early stage of overall budget negotiations, and she was careful to avoid drawing any “lines in the sand” about what would trigger her opposition and/or a veto, though she did set some guidelines.
“The bottom line message continues to be that we need to look for additional spending cuts before we ever talk about revenue (i.e. tax hikes),” said Rell. “I believe we can do a lot more in spending cuts than we have thus far.”
The governor sidestepped questions on whether she might veto a budget plan from the Democrat-controlled legislature that includes an income tax hike. However, Rell did indicate she is not keen on the Democrats proposal to levy a three-year 30% corporate tax surcharge on successful companies. “A lot of people are talking about businesses moving (away) from our state and any type of tax (hike) could be the last nail in the coffin,” she said.
Few Capitol observers are willing to wager how and when this year’s budget struggle will be resolved because of the enormity of the deficit problem. The current fiscal year has red ink totaling more than $700 million, and that’s small potatoes compared to the projected deficit for the new two-year budget cycle. That deficit could be between $7 billion and $9 billion.
The first target for a final accord on the budget is June 3, the legislature’s constitutional adjournment date. The top Democrat in the Senate, Donald Williams, believes lawmakers and the governor should work hard to meet that deadline. However, if weeping and gnashing of teeth over the budget persist, then the next target is July 1—the start of the new fiscal year. If that deadline is not met, the government would get into the troublesome practice of adopting “continuing resolutions” to keep state government running while budget negotiators palaver. Things will get worse if the budget strife moves into the summer.