(06/04/07) HARTFORD ? The governor?s budget director says talks Monday have shifted to spending after a continued stalemate over taxes.

The sticking point is the Democrats? progressive income tax plan, which would raise taxes on the wealthy, and the governor?s plan to cap property taxes. Democrats don?t like the tax cap, but Governor Jodi Rell (R-CT) is standing firm on no tax increases.

Rell?s budget director, Bob Genuario, says the spending package still needs work. Republicans have a 7 percent tax increase in their plan, while Democrats have a 10.5 percent hike.

?Frankly, their overall level of spending is still significantly higher than what the state can afford without tax increases,? Genuario said. ?Given our current financial situation, we ought not be in a position to have to do that.?

Genuario says he?s cautiously optimistic about events over the next couple of days. He believes if spending can be agreed upon, tax issues will be easier to work out. Lawmakers have until Wednesday to pass a budget.