Rell clashes with Democrats over state budget deficit

HARTFORD — Republican Gov. M. Jodi Rell clashed with members of the state Legislature’s Democratic supermajority during the holiday break, vetoing two bills approved by lawmakers to reduce the state’s budget deficit.

Rell vetoed House Bill 7101, An Act Concerning the Estate and Gift Tax, and Senate Bill 2101, An Act Concerning a Deficit Mitigation Plan for the Fiscal Year Ending June 30, 2010.

“Called into special session to deal with a budget deficit estimated between $337 million and $550 million, the Democrats in the Legislature managed to trim state spending by a feeble $12.4 million,� Rell said in a written statement Dec. 28. “It is a repeat of the same pattern we have seen time and again this year. Regrettably, it is an outright refusal to admit that state spending has far exceeded the ability of state taxpayers — any state taxpayers — to pay for it.�

Rell’s vetoes received widespread criticism from Democrats, including House Speaker Chris Donovan. “Governor Rell’s veto is a clear signal that she places a higher value on protecting a new tax break on estates worth more than $3.5 million than closing this year’s budget deficit and protecting thousands of Connecticut jobs,� Donovan said in a statement responding to the governor. “The plan approved by the House and Senate balanced the state budget. Her veto is irresponsible and puts our state in financial jeopardy.�

Donovan has blamed Republican leadership at the national level for allowing a deregulated financial system collapse on Wall Street, resulting in fiscal deficits across the nation.

“Connecticut is joined by 47 states dealing with budget crises brought on by an international economic collapse caused by Wall Street greed and years of Republican neglect of controls on financial institutions in Washington,� he said Dec. 27. “Runaway state spending did not cause our fiscal crisis. Just 15 months ago, Connecticut was planning how to invest the state’s record sixth consecutive surplus.�

Donovan also accused Rell of not doing enough to bring federal dollars to Connecticut.

“The governor has abdicated her responsibility to obtain and use available federal dollars to spur economic growth. Her cuts to health-care programs would mean the loss of $38.5 million in matching federal dollars. Her administration has missed application deadlines or failed to act on hundreds of millions of available federal dollars — money that could maintain and create jobs or allow the state to invest in job growth.�

But Rell said Democrats are avoiding the current problem.

“The Democrats want to move money around from one account to another and one fiscal year to another in the vain hope that increased taxes will fill the holes left behind,� she said. “The increased taxes passed this summer have not produced the expected revenue — why do they think more taxes would change that?�

Rell also said she would not give up a plan to reduce Connecticut’s estate taxes. H.B. 7101 would postpone changes in the state’s estate tax law that are scheduled to take effect Jan. 1, raising millions of dollars through additional taxes on the estates of those who die between Jan. 1, 2010, and Jan. 1, 2012.

Rell has proposed that her rescission authority should be increased incrementally, up to 6 percent of the total appropriation from any fund or 10 percent of any appropriation when a deficit of 3 percent or more exists; and up to 10 percent of the total appropriation from any fund or 15 percent of any appropriation when a deficit of 5 percent or more exists.

Under existing law, a governor can make rescissions when a budget deficit exists that is greater than 1 percent of the General Fund. Current rescission authority is limited to up to 3 percent of the total appropriation from any fund or 5 percent of any appropriation.

“These are modest — but necessary — changes,� Rell said. “They will help ensure that the failure of the usual system for dealing with budget shortfalls does not wind up creating a lingering crisis or — worse — being solved on the backs of taxpayers with tax increases or ill-considered borrowing.�

The rescissions statute does not allow a governor to cut aid to municipalities.