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Connecticut's deep spending cuts in effect as new deadline passes

NEW YORK (Reuters) - Connecticut’s fiscal crisis hit a new low on Sunday, when scheduled spending cuts dramatically lowered state aid for many municipalities, with no budget in sight three months after it was due.

At the start of business on Monday, 85 towns in the north-eastern U.S. state will get no education cost-sharing funding, which towns send to their schools. Another 54 will get less funding than last year. About 30 poorer cities - including capital city Hartford - will not see major cuts.

The budget delay stems from disagreements among state lawmakers and Governor Dannel Malloy over how to close a two-year, $3.5 billion deficit.

When the state’s fiscal year began July 1 without a budget, Malloy took over spending through an executive order, which he revised in August to include more cuts that went into effect as of Sunday.

Lawmakers are scheduled to meet on Monday with Malloy, a Democrat not running for re-election. Malloy vetoed a Republican-backed budget on Thursday.

Some non-profit providers of services that use state aid will see funding restored under his revised order. But for others, cuts under the initial spending plan are already taking their toll.

Services for adults with mental health and addiction problems - including intensive day programs that aim to avoid hospitalization - have had funding reduced by 5 percent across the board, said Community Health Resources CEO Heather Gates.

That stripped about $1 million out of $19 million from her agency, which serves 24,000 clients annually, leading it to reduce staffing in residential and youth programs and freeze all hiring.

“As this stand-off continues, the human service system is stuck in the middle and the only people who are going to be hurt are the people we are serving,” she said. “We are all just waiting because we can’t make any decisions about anything, not knowing what our funding is going to be.”

In Bridgeport, Connecticut’s biggest city where 23 percent of its residents live in poverty, a program called StreetSafe planned to shut its doors on Sunday.

StreetSafe outreach workers are ex-convicts who help steer young people away from gangs and violence towards jobs, education and treatment.

The non-profit that runs StreetSafe funded the program out of its reserves after cuts first came down in July. But after three months, it cannot keep going, said spokeswoman Patty McQueen.

“Oct. 1 is the start of another month without a check,” she said.

Reporting by Hilary Russ, Editing by Rosalba O’Brien