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Connecticut Gov. Dan Malloy Signs $40.1 Billion Budget With Tax Hikes

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Gov. Dan Malloy signs the new budget - Hartford, CT - May 4, 2011 (credit: AP Photo/Jessica Hill)

Gov. Dan Malloy signs the new budget – Hartford, CT – May 4, 2011 (credit: AP Photo/Jessica Hill)

HARTFORD, CT (AP / CBSNewYork) - Connecticut Gov. Dannel P. Malloy has signed his first budget into law, calling it tough, fair and honest.

WCBS 880 Connecticut Bureau Chief Fran Schneidau: The New Taxes And Tax Hikes Are Now Law

But the two-year, $40.1 billion plan that became law on Wednesday is not yet finished. It relies on $2 billion in labor savings over two years that have not yet been negotiated with state employees.

WCBS 880 Connecticut Bureau Chief Fran Schneidau: Layoff Notices Could Go Out This Week

Malloy says he’s still hoping a deal can be reached before layoff notices are sent to as many as 4,000 workers in the coming weeks. The first notices, effective July 1, could come as soon as Friday.

Republican lawmakers, the Legislature’s minority party, have strongly criticized the budget for raising taxes by $1.4 billion in the first year and $1.2 billion in the second. They say Connecticut taxpayers can’t afford the largest tax increase in the state’s history.

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