CT News Junkie | 3 Months In & $27M In Red

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3 Months In & $27M In Red

by | Sep 21, 2012 12:00pm
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Posted to: State Budget

(Updated 2:34 p.m.) Three months into the new fiscal year and Gov. Dannel P. Malloy’s budget office is already reporting that this year’s budget is running a nearly $27 million deficit.

Office of Policy and Management Secretary Ben Barnes reported the numbers Thursday to state Comptroller Kevin Lembo in his monthly report.

The 2013 budget anticipates that spending will increase 2.6 percent over last year and revenues are budgeted to grow at a rate of 3.1 percent over last fiscal year. In his letter earlier this month Lembo pointed out that while the spending increase is “historically low” it will take careful monitoring to achieve.

Last year actual spending increased 5.2 percent over the previous fiscal year.

In his report to Lembo, Barnes said he is already anticipating a $100 million deficiency in the Department of Social Services’ Medicaid account due to increasing caseloads for the Low Income Adult program. The administration has applied for a waiver from federal Centers for Medicaid and Medicare Services which would allow it to kick as many as 13,000 residents off the program. To date no decision has been made, but if the federal government rejects the request it could leave a $50 million hole in the 2013 budget and another $50 million hole in the 2014 budget.

“Beyond these areas, we continue to watch trends in several agencies that will demand close monitoring over the coming months and may impact future expenditure projections, including personal services and other expenses,” Barnes wrote.

On the revenue side of the budget Barnes said it’s too soon to tell whether the numbers need to be adjusted.

“Given that it is too early in the fiscal year to make reliable projections in a time of economic uncertainty, all other revenue projections remain unchanged relative to the adopted budget,” Barnes wrote. “As noted in last month’s letter, the revenue forecast that underlies the FY 2013 budget assumes a modestly accelerating national expansion with has yet to materialize.”

Barnes said his office will be closely monitoring sales tax collections as well as Indian gaming payments, both which appear “weaker than expected.”

“Finally, gridlock and political brinksmanship at the national level relative to addressing the budget and economy, including the prospects of sequestration and the expiration of the tax cut and other significant federal policies in January, continue to lend a high level of uncertainty to our revenue forecast,” Barnes wrote.

But Malloy’s administration remained upbeat about the budget projections.

“It’s very early in the fiscal year. We fully expect some minor ups and downs as we move forward,” Andrew Doba, Malloy’s spokesman said Friday. “But the fact that we’re talking about such a very, very small percentage of the overall budget, especially given the uncertainty we face in Medicaid, is positive.”

In January, Gov. Dannel P. Malloy will release a two-year budget proposal, which the legislature will be asked to adopt. Based on earlier budget numbers it’s not clear how deep the spending cuts he would have to make in order to balance it and stay under the constitutional spending cap would have to go.

As it stands currently, Malloy used a $500 million surplus in order to balance the 2013 budget. His administration is staring down an estimated $423 million budget deficit already in 2014 but despite those challenges has remained confident it will be able to address any shortfall.

Republicans lawmakers have remained skeptical about Malloy’s ability to close the budget deficit after it decided last year to use money it had earmarked to pay down some borrowing to balance the budget and refused to budget for an increase in Medicaid enrollment.

Sen. Minority Leader John McKinney said the Malloy administration ignored the increase in Medicaid enrollment when it completed the 2013 budget even though the numbers were predictable.

According to the monthly August report by the Department of Social Services there are 671,550 individuals receiving Medicaid services, which includes children and families on the HUSKY program, and 385,847 individuals enrolled in the Supplemental Nutrition Assistance Program, also known as food stamps.

State government needs to provide certain services, but cut spending where it can, he said.  In fairness to the governor the Republicans also included the Medicaid waiver proposal in their alternative budget. And he acknowledged that if the state doesn’t get it, it will drive a $100 million hole in the budget over the next two years.

But aside from big pockets of money going to social services there are very few places in the budget the governor can cut. Malloy’s hands are somewhat tied when it comes to spending cuts since he inked a deal in 2011 with state employees which protects them from layoffs for the next three years.

“Clearly the governor has tied our hands to get more savings with our employees,” McKinney said Friday. But he believes there’s still room to cut spending even if he doesn’t believe it will happen.

“I don’t have any confidence the Democrats in the legislature are going to make those cuts, that’s why I’ve been predicting all along that we’re going to see another tax increase,” McKinney said.

He’s predicting the Democrats will seek to hike the income tax on the state’s wealthier residents by end of the 2013 legislative session.

House Minority Leader Lawrence Cafero said he doesn’t know how Malloy is going to handle the budget cuts, which need to be made, but he knows he has three options: increase taxes, cut spending, or borrow more money.

“It’s deja vu all over again,” Cafero said.

“The very thing he said he was going to correct by taking the road less traveled has not worked,” Cafero said. “What is frustrating is that when these facts by his own administration are put out, when the facts don’t fit his storyline, he claims that the facts are wrong.”

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(3) Archived Comments

posted by: SocialButterfly | September 22, 2012  11:40am

As long as Connecticut keeps electing a Democratic General Assembly and Democratic Governor—there will never be any fiscal sanity in Connecticut. In our state it’s the Democratic politically blind leading the legislative   politically blind. We can expect to see continual fiscal red in Connecticut’s future.
Gov. Dannel Malloy is a carbon copy of the biggest spender in Pres. Barack Obama—the President who is the all-time biggest presidential federal deficit spender in our nation’s history. Obama must be voted out of office, along with his deficit spending rubber-stamp, U. S. Rep. Chris Murphy, or our nation’s future will continue o go “down-the-tube” under the control of the billionaires who control Obama—on a directed path to our nation’s failure.”  Obama can’t be making all of his presidential policy failures by accident. 

posted by: Major Shmuck | September 24, 2012  4:35pm

Major Shmuck

Troops, What the Unions DON’T want you to know:

Many state workers that have left state employment are being replaced with higher paid consultants….  Middle Management is being beefed up like there is unlimited money to spend.  Job postings are updated daily…..  Major Shmuck says…..“SAY WHAT?”  Yes, Gov Mellon Head is speading like a kid in the store.  CSEA SEIU recently held a convention where Gov. Mellon Head spoke.  Union members were told by leaders, “Do not boo the Gov. because it won’t look good”  One union member was escorted out.  Hey, if Union Leaders have to tell rank and file members that they should not boo, that is pretty said…  In a time where Union leaders and Democrats work together to screw the working person, is pretty sad.  What is worse, these union left’ies stood up and cheered THANK YOU….  The Gov looks like a hero, Union Leaders unethically change bylaws look like heros, Democratic Leaders look like heros and who pays the dime?  Hard woking state employee and hard working citizens….

Major Shmuck says, lets get rid of curropt unions and make CT a Right To Work State so unions and Far Left’ies dont raid our tax money and leave hard working people take the blame for them as they pocket the cash.

posted by: SocialButterfly | September 24, 2012  8:17pm

Major Schmuck: I agree. As long as the voters keep electing Democrats—the rape of taxpayers by the unions will continue. We get shafted at the polls by our liberal voters. We do it to ourselves.