Facing Budget Crisis, Connecticut Lays Off State Workers

Like some other states, Connecticut is facing a budget shortfall. And in part because of its shrinking finance sector and dependence on personal income taxes for revenue, state lawmakers, a majority of whom are Democrats, are finding themselves in a fiscal pickle.

Forced to rely heavily on its highest earners to fill the state’s coffers, and fearful of alienating more of the highest-earning residents after a tax increase last year, legislators are not entertaining additional taxes on the rich.
 
“We’d price ourselves out of the market,” said Gov. Dannel P. Malloy, a Democrat, if the state tried to make up for its $922 million shortfall with a “millionaire’s tax.” The revised budget Mr. Malloy proposed on Tuesday covers the shortfall, incorporating cuts to expenses and jobs — as many as 2,500 state positions could be eliminated — but no tax increases.
 
Connecticut faces a new economic reality, Mr. Malloy said in an interview on Saturday. High-paying finance jobs, which helped the state’s budget, are not expected to return to pre-recession levels.
 
Last Monday, 165 state employees were laid off from social-service agencies, among the total 262 workers last week, with more layoffs expected this week. “We wouldn’t be doing this if we weren’t seeing a shortfall in revenue,” Mr. Malloy said.