Republicans Cut Borrowing by $500 million to Close Deficit; Caution: No Time for More Spending

April 30, 2010

HARTFORD – Republicans greeted revised revenue estimates with cautious optimism today but said the newly found income tax returns should be used to pay off massive state debt and not be used for any new spending programs.

“Connecticut had a better April than expected when it comes to income tax returns because of the largest tax increase in state history that Democrats pushed through last September,’’ House Republican Leader Lawrence F. Cafero Jr., said. “But most, if not all, other sectors remain off despite the tax increases. Connecticut is still looking at a nearly $4 billion deficit for fiscal year 2012.’’

“A slight uptick in revenues due to a massive Democrat tax increase does not exempt Democrat leaders from their responsibility to cut wasteful government spending and reduce our debt,” said Senate Republican Leader John McKinney. “The legislature needs to make long-term structural changes to reduce the size and cost of state government.”

Republicans said the state should use the additional $500 million in revenue Connecticut projects to reduce the amount of borrowing that has been proposed. “One-shot revenues to pay for additional spending are not solutions. We have to address the structural holes in the budget,’’ Cafero said.

The Republican plan unveiled two weeks ago balanced without raising taxes by rolling back spending to 2009, concessions from state workers, early retirement, privatizing some state services and combining state agencies. The Republican leaders said the state must continue in that direction and commit all other available revenue to filling the structural budget holes.

The Republican leaders noted that more than 101,000 private sector jobs have been lost in this recession and virtually all other revenue streams outside of income taxes – casino receipts, sales taxes, corporate taxes, and license and permitting fees remain off.

Republicans noted that just Thursday night House Democrats passed an $18 million tax on hotels that will hit the state’s tourism industry and have voted to raise corporate, utility and estate taxes in committee votes earlier in April. Cafero and McKinney called upon Senate Democrats to reject the hotel tax that the House passed.

Last Sept. 1 the Democrats borrowed $950 million for operating costs without spending cuts which led to the ongoing deficit. “Without reductions in spending, this cycle will continue,’’ Cafero said.