Governor Rell: Report Shows Budget Deficits Rising Sharply

National Economic Woes Decimate State Revenues;

Projected Deficit in 2010 is $2.6 Billion, $3.3 Billion in 2011

Listen to the Governor here.

            Governor M. Jodi Rell today said a new report by the Office of Policy and Management shows projected state budget deficits in excess of $2.6 billion in fiscal year 2010 and almost $3.3 billion in fiscal year 2011. The numbers are based on the current service requests of state agencies – the amount it will cost for state government to maintain services and programs at their existing levels over the next two years.

            “The turmoil on Wall Street and the national economic slump have caused a steep decline in Connecticut tax revenues,” Governor Rell said. “Income tax, sales tax and casino revenues are all down significantly. I am not talking about slower growth, but about zero growth – and actual diminished revenues. In terms of absolute dollars, the state will have less revenue in both 2010 and 2011 than in 2009. That means we are going to have to cut spending. These will be difficult cuts, cuts that will hurt people and programs, but they must be made.

            “It is no secret how we got here or how our nation and dozens of other states got here,” the Governor said. “What happened on Wall Street has affected Main Streets all across Connecticut. The question is, how do we get out and how do we continue to make sure our state is positioned for economic recovery? One thing is clear: While Connecticut has consistently outperformed the national economy we are not immune from the national problems. Difficult days are already here for too many of our families – families facing foreclosure, families whose husband or wife has been laid off, and families who are turning to food banks or applying for energy assistance for the first time.”

            Governor Rell has already taken a number of steps to keep Connecticut’s economy ahead of the national economic curve, including a five-point plan to keep credit flowing to businesses and manufacturers who create jobs, programs to help sub-prime mortgage borrowers and actions to control state spending including a hiring freeze, a spending freeze, a travel ban and two rounds of budget cuts totaling $180 million.

            In addition, the General Assembly is expected to approve Governor Rell’s $302 million deficit mitigation plan in Special Session on November 24. That plan will address the fiscal year 2009 budget shortfall.

            “The time for hoping our economic problems will simply pass like an afternoon storm is over,” Governor Rell said. “It is now time to batten down the hatches. Projected deficits of $2.6 billion and $3.3 billion are numbers that should get anyone’s attention. The bottom line is that our budget problems are growing and we cannot afford to wait to act.

            “I have offered spending cuts up to the amount allowed by state law,” the Governor said. “Today’s projections clearly show that more cuts will be needed. No area of government will be sacrosanct from cuts because no part of our economy has been unaffected. Families already struggling in this economy are not responsible for the mess the economy is in – but they are already paying the price and the price is too high. They cannot afford to pay even more in taxes – at any level of government.”

            The “Fiscal Accountability Report” by the state Office of Policy and Management also indicates that spending at current levels will also exceed the constitutional spending cap in both years of the next biennium.

            “We are facing some of the leanest times in Connecticut’s history,” Governor Rell said. “The national economic woes have left us with a hangover we will be dealing with for years to come. However, this is also a time of opportunity – an opportunity to streamline government, to return it to its core functions, to position it to finally address long-term problems. I will support and bolster the core functions of state government. I will also identify the functions we can no longer afford and I will be calling on lawmakers to do the same.

            “These are the most tumultuous economic times our nation and state have faced since the Great Depression,” the Governor said.  “As Governor, I am ready to make the hard, difficult decisions we need to make to protect Connecticut’s future. The task of governing is never more important than during tough times – but we know that to meet the hopes and expectations of tomorrow, we cannot take the easy way out today.”