Gov. M. Jodi Rell today vetoed a bill that would have raised the state's minimum wage from $7.65 to $8 beginning Jan. 1, 2009, and to $8.25 beginning Jan. 1, 2010 saying that she does not want to take any action that will negatively affect businesses or jobs during a national economic downturn.

In addition to vetoing House Bill 5105, An Act Concerning the Minimum Wage, the governor also vetoed Senate Bill 55, An Act Concerning the Tip Credit, which is rendered unnecessary by the veto of House Bill 5105.

"We cannot take a chance on hurting families or employers by signing another minimum wage increase into law at this time," Rell said in a statement. "Businesses have told me that they would not be hiring if the wage hike went into effect. Employers that are now operating on the margin may be forced to close or leave Connecticut to more business-affordable states, resulting in job losses that will undermine the already fragile foundation of financial security for thousands of families."

Rell signed the last increase in the minimum wage two years ago. Connecticut's minimum wage is already well above the federal minimum, which is $5.85 per hour.

Businesses where all workers' wages are tied to the minimum wage would also see increased costs, since all workers' pay would have to be increased to maintain the differentials. Other businesses will simply increase their costs to consumers to keep up.

SB 55 would have offset the minimum wage increase in HB 5105 for hotel and restaurant employers by increasing the tip credit those employers could recognize for bartenders and waitstaff effective January 1, 2009. Without the increase allowed in HB 5105, SB 55 could actually result in reducing the current wages for those employees.

Last week, Rell said her budget office is warning that the shortfall for the current fiscal year is growing while the projected deficit for Fiscal 2009 has increased to as much as $150 million. On Friday, the governor ordered a hiring freeze for state agencies. The governor has already ordered a number of steps to reduce state government expenses, including a ban on out-of-state travel, limits on the use of state purchasing cards and reductions in the use of state vehicles and gasoline consumption.

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