HARTFORD — Connecticut’s Democratic governor and legislative leaders announced Friday that they have reached an agreement on a revised budget, saying it still includes funding for additional early childhood education slots and other major initiatives, despite a recent drop in the state’s projected surplus by hundreds of millions of dollars.
‘‘I’m proud of this budget,’’ said Governor Dannel P. Malloy. ‘‘I’m proud of the steps we’ve taken.’’
But because of the state’s revenue decline, the agreement postpones some planned tax relief, such as reinstatement of sales tax exemptions on non-prescription drugs and up to $50 in clothing and footwear.
The deal also scraps previously approved plans to allow the state Lottery Corporation to run keno, a gambling game that has not yet been implemented. While keno was included last year in the two-year budget as a way to generate more state revenue, many lawmakers have since voiced regret with the decision to allow the game, probably at bars and restaurants. With the agreement Friday, lawmakers will have to repeal the language that allowed keno in the state.
Democratic leaders, who control the General Assembly, plan to call the approximately $19 billion budget bill for a vote this weekend.
While Malloy lauded the plan for being balanced and holding spending growth to 1.6 percent, it is doubtful it will get much support from the Legislature’s minority Republicans, who have accused Malloy of ignoring the projected deficits in future years and the state’s continued fiscal woes.
‘‘I think what we witnessed today was, how do I get to November without the people of Connecticut knowing what’s really going on,’’ said Senate minority leader John McKinney, one of six Republicans hoping to challenge Malloy for governor in November.
Malloy acknowledged that this year’s legislative session, which ends May 7, has had its ‘‘surprises and challenges.’’ This week he was forced to pull the plug on his proposed $55-per-person tax refund and an additional $100 million pension payment because the state’s projected surplus had collapsed by $461.5 million to $43.4 million, money that will be deposited in the state’s Rainy Day Fund under the Democratic agreement.
Malloy’s administration blames much of the surplus funds drop on personal income tax collections from wealthy people. It said more people than expected claimed investment income in 2012, ahead of the Jan. 1, 2013, expiration of President George W. Bush’s tax cuts.
The governor is seeking a second term this year.