CONNECTICUT BUDGET PROPOSAL CALLS FOR MODEST INCREASES

HARTFORD, Feb. 7 -- Warning about a cooling economy, Gov. John G. Rowland
today proposed a budget for the next two fiscal years that he said would
impose fiscal restraint while allowing modest new spending for education,
mental health and drug rehabilitation programs.

Though Mr. Rowland's budget would increase spending by 3.6 percent in the
2002 fiscal year, which begins July 1, and 4.3 percent the next year, it
represents a less optimistic view of the state's economy than did the
budgets of the last two fiscal years. The budget grew by 6 percent in the
2001 fiscal year and by 6.4 percent in the 2000 fiscal year.

Connecticut operates on a two-year budget, though lawmakers and the
governor never seem to be able to avoid changing it every year. For the
2002 fiscal year, Mr. Rowland's plan totals $12.9 billion, and for 2003,
almost $13.5 billion.

Mr. Rowland, a popular Republican halfway through his second term, unveiled
his proposal in a speech to the General Assembly that focused on education,
mental health and prison overcrowding. Mr. Rowland said he wanted to give
$50 million more over the next two years to assist suburban school
districts, $1.2 billion to renovate and build new schools statewide, and $5
million to provide drug treatment and psychiatric support for prisoners, as
well as $55 million in the next fiscal year to begin a variety of locally
run mental health services.

The governor's proposal would increase spending by a total of about $1
billion over two years: $450 million in the 2002 fiscal year and $556
million in the 2003 fiscal year. But even with those increases, some
programs will not be able to keep up their current level of services.

"It is fiscally conservative," Mr. Rowland said at the start of a 40-
minute address, "but it is balanced by the need to meet higher expectations."

Afterward, Democrats, who control the state's House of Representatives and
the Senate, said the speech had presented a series of grand- sounding
proposals that, in reality, would merely add to some state services at the
expense of other, similar ones. Kevin B. Sullivan, a Democrat and the
Senate president pro tem, called Mr. Rowland's budget "one gimmick after
another" that would do little to actually improve the lives of most state
residents.

Throughout his speech, Mr. Rowland looked back at the accomplishments of
his administration since he took office in 1995, citing $2 billion in tax
cuts and $3.2 billion in increased expenditures. But he repeatedly urged a
conservative and even wary look at the state's economic forecast.

"Fiscal restraint has got to be the guiding principle under which this
legislature must conduct state business," he said.

Restraint is needed, said the governor's budget secretary, Marc S. Ryan,
because once new tax cuts take effect after July 1, state revenue will
probably fall from 6.3 percent this fiscal year to 1.9 percent next fiscal
year, a drop of 70 percent.

Accordingly, to pay for increased aid to suburban schools, Mr. Rowland
would cut the same amount from the state fund that pays cities and towns a
part of what Connecticut earns annually from Indian tribes' casino-gambling
profits. And to pay for the proposed elimination of the hospital sales tax,
at a cost of $115 million over two years, the governor would cut some
medical services.

Still, Mr. Rowland seemed intent on giving lawmakers some creative
education and job-training proposals.

He urged the General Assembly to revive a bill it passed in 1972 that
created a school voucher program. He proposed financing a modern version of
it, giving up to $2,000 a year to 1,000 urban students, with $10 million
over five years. "The legislature approved this program 30 years ago," Mr.
Rowland boomed, looking back to a bank of impassive Democratic lawmakers.
"Now let's have the courage to try it."

Mr. Rowland also proposed giving up to $3 million to the Y.M.C.A. in
Connecticut to help it expand child care services for working parents.

The two proposals struck some Democrats as evidence that Mr. Rowland is
taking his lead from President Bush's education and welfare initiatives.
"Faith-based social funding and a voucher program," mused David B. Pudlin,
the Democrats' House majority leader. "It looks like a trickle-down
ideology from the White House."

The governor, who convened a blue-ribbon commission last year to study
Connecticut's mental health care system, also recommended spending $135
million more in the next fiscal year to create community and prison-based
treatment programs and to rehabilitate drug-addicted prisoners and others
convicted of nonviolent drug offenses.

His two-year budget would give the Department of Mental Health and
Addiction Services $28.5 million in the 2002 fiscal year and $42 million in
the 2003 fiscal year.

"Crime must be punished, but addiction must be treated," Mr. Rowland said,
sounding much like Gov. George E. Pataki of New York in his budget address
last month, when he proposed replacing some mandatory sentences for drug
offenders with treatment programs.

Some mental health advocates criticized Mr. Rowland for not following the
mental health panel's financing recommendations more closely, but
influential Democrats said they would support most of the governor's prison
and mental health proposals. "To not do what the governor is recommending
would cost $100 million, quickly, to build more prisons," said
Representative Michael P. Lawlor, the Democratic co-chairman of the General
Assembly's Judiciary Committee.

The governor also proposed $156.5 million in tax cuts in 2002-03 and an
increase in the clothing tax exemption to $125 per item from $75, which
would save consumers an estimated $32 million annually.