Governor Rell: New Deficit Estimate Dips as

Effects of Labor Cost-Saving Agreement Felt

            Governor M. Jodi Rell today announced that her budget office now estimates the state budget deficit for the fiscal year that ends June 30 is $968.2 million, down from last month’s estimate about $1.06 billion, a decline that reflects labor cost savings from a far-reaching agreement between Governor Rell and the state employee unions.

            “For once, the deficit is headed in the right direction – but it is still a staggeringly high figure, especially this close to the end of the fiscal year,” Governor Rell said. “The agreement with state employee unions saves taxpayers money now, it achieves savings in the next two fiscal years and it will cut costs for years to come – but it cannot close the deficit alone. I need the help of the Legislature to close this gap.

            “Since last spring I have taken every action I can to pare state spending to the bone and I will continue to look for ways to save,” the Governor said. “There are still opportunities to reduce spending and move available funds into the General Fund. I remain hopeful that the Legislature will use the time remaining in this session to make further spending cuts and reduce this deficit before the fiscal year runs out.”

            Governor Rell has taken a number of cost-saving steps since last year, including five rounds of state agency rescissions, a ban on out-of-state travel, a hiring freeze and a ban on nonessential purchasing. The Governor has also presented four sets of deficit mitigation proposals to the Legislature.

            In recent weeks Governor Rell has also directed state agency heads to cancel state purchasing cards – known as “P-Cards” – and to idle state fleet vehicles two days a week, except when absolutely essential to agency missions or needed for public safety.

            In its monthly letter to the state Comptroller, the Office of Policy and Management said its new estimate of the deficit reflects $75 million in savings achieved through the agreement negotiated by Governor Rell and the State Employee Bargaining Agent Coalition. That agreement was ratified by rank-and-file union members this month and approved by the General Assembly last week.

            OPM said the estimate also reflects lower-than-expected estimates of sales tax revenues, which are $30 million below prior predictions, and higher-than-expected estimates of federal funds (up $24.1 million) and the public utilities tax (up $15.7 million). The increase in the federal grants estimate is due largely to the quicker flow of stimulus funding, OPM said.