The budget also closes a projected $200 million deficit in the current year and does not raise taxes beyond those that were raised last year in the largest tax increase in state history.

The state House of Representatives approved a $20.5 billion budget deal early Tuesday that would increase spending by $143 million in the next fiscal year, address a growing deficit and boost aid to cities and towns.

A new state budget report Monday showed a steep decline in tax revenues and a widening deficit now projected at $200 million for the current fiscal year that ends June 30.

Well-publicized pension crises are erupting in states nationwide, with litigation ranging from disputes over cost of living adjustments to changing qualifying factors for benefits recipients. Often unseen are the legal issues relating to where, how, and who is investing pension money.

Comptroller: Government $95.7M in the hole; Gov. Malloy says year will end in black.

A $700 million bond sale in November is among a number of accounting measures Republicans and other critics are questioning as exactly the kind of fiscal gimmicks Mr. Malloy had vowed to end when he took office last year.

Gov. Dannel P. Malloy insists he won't seek more taxes this session after raising more than $1.5 billion last spring, but Republicans already are questioning whether more tax talk is dead -- or simply being swept under the rug until after the November legislative elections.

In more bad financial news for the state, the legislature's nonpartisan fiscal office now says the state budget deficit has grown to a projected $144.5 million because the the state is spending more than expected and collecting less revenue than projected, despite tax increases last year.

Connecticut Gov. Dannel P. Malloy plans to use his budget-cutting authority to trim programs across state government and impose new restrictions on hiring to help cover a projected $73.6 million deficit that has developed in this year's state budget.

Connecticut Gov. Dannel Malloy on Monday called for pumping up payments into the State Employees Retirement System, one of the nation's most under-funded public pension funds.

Connecticut Gov. Dannel Malloy on Monday called for pumping up payments into the State Employees Retirement System, one of the nation's most under-funded public pension funds.

Moody's Investors Service downgraded Connecticut's general obligation debt a notch Friday, citing the state's high fixed costs, low pension funding and depleted reserves.

"There is enormous work left to be done with respect to the fiscal condition of the state of Connecticut," Office of Policy and Management Secretary Benjamin Barnes told lawmakers as part of his office's Fiscal Accountability Report.

Connecticut's pension system serving 175,000 active and retired state employees, teachers, and those in the judicial system reports an unfunded liability approaching $16 billion - an amount nearly equal to the state's entire annual budget.

In 2008, 175 former Connecticut state employees received pensions worth at least $100,000. That number rose to 299 people in 2009 and is expected to continue rising.

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink - budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.  States are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

E-governance, or the use of new technology to make government more efficient and effective, offers the ability for the state to provide information and deliver services to citizens at a far lower cost than the traditional bureaucracy.

Connecticut Gov. Dannel Malloy on Monday called for pumping up payments into the State Employees Retirement System, one of the nation's most under-funded public pension funds.

Moody's Investors Service downgraded Connecticut's general obligation debt a notch Friday, citing the state's high fixed costs, low pension funding and depleted reserves.

"There is enormous work left to be done with respect to the fiscal condition of the state of Connecticut," Office of Policy and Management Secretary Benjamin Barnes told lawmakers as part of his office's Fiscal Accountability Report.

Connecticut's pension system serving 175,000 active and retired state employees, teachers, and those in the judicial system reports an unfunded liability approaching $16 billion - an amount nearly equal to the state's entire annual budget.

In 2008, 175 former Connecticut state employees received pensions worth at least $100,000. That number rose to 299 people in 2009 and is expected to continue rising.

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink - budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.  States are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

This all boils down to who gets to pick taxpayers' pockets first, public pensioners or municipal bond investors? More people are waking up to the hard reality that when it comes to state and local government, somebody has to lose money over the next few decades. The National Association of Bond Lawyers is worried enough about it to issue "Considerations" for advising clients who think they're getting safe investments.

Despite an organized campaign to stop public pension reform, reality is beginning to break through.  One recent report outlines a possible path to long-term solutions and another details the necessity of states and municipalities finding their own way because federal bailout is impossible.  And Chicago Mayor Rahm Emanuel released a plan that could have been based on both reports.

Hey, young public employees, what are you going to do when your pension checks bounce after you paid in for decades? That is what will happen in many - maybe all - states and municipalities sooner or later if they do not reform right now. If you want to see the future, just look at Illinois. One citizen there did, and came up with a real reform plan that might work.

Public employees should take their pension money now and run to avoid risk of getting reduced benefits - or nothing - in the future. It's the best deal for them and for taxpayers. A growing chorus of credible voices including the Government Accountability Office, a Federal Reserve bank and now the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government confirm state and local government finances are "spiraling out of control" and even draconian reforms only make it "more likely" that future benefits will paid in full.

Hey, young public employees, what are you going to do when your pension checks bounce after you paid in for decades? That is what will happen in many - maybe all - states and municipalities sooner or later if they do not reform right now. If you want to see the future, just look at Illinois. One citizen there did, and came up with a real reform plan that might work.

This is what it sounds like when the Federal Reserve Bank screams: "Much has been written about the various headwinds restraining economic activity over the near term. However, our economy also has other headwinds to confront over the medium- to-longer-term. ... the finances of some state and local governments are also under stress and in need of serious adjustments."  - Federal Reserve Bank of Cleveland President Sandra Pianalto

This week's state budget update from Bob Williams, President of State Budget Solutions.

Connecticut, Kansas, Indiana and Nebraska are finalizing their budget for the coming fiscal year(s). Read about those states and see the budget deficits in all 50 states.