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Budget Deal Doesn’t Erase Future Deficits, But Malloy & Dems Not Worried

by Christine Stuart | May 2, 2014 12:43pm
(11) Comments | Commenting has expired
Posted to: State Budget, Taxes, State Capitol

Christine Stuart photo

Gov. Dannel P. Malloy and Democratic House Speaker Brendan Sharkey and Sen. President Donald Williams

(Updated 3:11 p.m.) Democratic Gov. Dannel P. Malloy and Democratic legislative leaders have struck a budget deal that maintains most of their priorities for 2015, repeals keno, and defers a handful of tax breaks.

“I don’t think there’s a lot of pain in the budget,” Malloy said. “There’s delaying some things by months. We are going to lower taxes, but we may lower them a month later or nine months later or six months later here and there.”

Despite creating what is likely to be around a $1.3 billion deficit on paper in 2016, Malloy said he’s proud of what he has accomplished in this budget and past budgets and doesn’t care “what the number is” in 2016.

The number legislative analysts have estimated based on the spending and revenue projections in the previous budgets “isn’t real. Isn’t verified. Doesn’t represent current budgeting,” Malloy said.

“I have no intention and I don’t think any governor has the intention of issuing a spending plan that would do that,” he said. “And the proof of that is that I haven’t. I’ve presented four budgets and negotiated four budgets.”

Malloy, who announced his re-election bid at the end of March and according to polling is even with one of the six Republicans challenging him, said “there will be no tax increase next year and we’ll have a balanced budget because we’re not going to spend money the way that legislation requires you assume you’re going to spend it.”

Malloy is fond of reminding the public that he inherited a $3.6 billion deficit when he took office in January 2011. So is it fair to say he’s fixed Connecticut’s finances when the 2016 budget is projected to have a $1.3 billion deficit?

“You’re dealing with a number that assumes a spending pattern which will not been replicated,” Malloy said of future deficits.

He said he’s not going to spend in a way that analysts assume.

“There will be no tax increase in the future. We will not overspend,” Malloy told reporters at the Capitol press conference to announce the budget deal. “. . . I have no intention of signing another tax increase.”

Pressed about what happens to future deficits based on the budget deal Malloy struck with Democrats, Malloy said he didn’t ask his budget office about what the budget numbers looked like in future years.

“Let me be very truthful, I don’t care what the number is,” Malloy said.

Why?

“Cause we’re not going to have a tax increase and we’re going to live within the budget,” he added.

The decisions made this year in the budget will impact future year spending and revenues.

But going from a $3.6 billion deficit to a $1.3 billion deficit that won’t be a deficit because “I say so” is a tough spot for Democrats to be in an election year.

Sen. Donald Williams, D-Brooklyn, who isn’t seeking re-election himself, said the governor’s had the courage to make “very tough decisions in tough times.”

“And we’ve gone from a position of having huge deficit to now having surplus,” Williams said. “The projections in the future are just that, projections. So, I think there’s every reason to believe the national economy has turned the corner.”

House Speaker Brendan Sharkey, D-Hamden, said what the governor was saying was right.

“The fact that there’s a projection of a deficit — I mean that’s based upon certain assumptions that are frankly not real world assumptions,” Sharkey said.

Christine Stuart photo

Sen. Minority Leader John McKinney and House Minority Leader Lawrence Cafero

The legislature’s Republican leadership disagreed.

“At the very moment the governor said he would not sign a budget with a tax increase he was not being honest with you or the people of Connecticut because there is a tax increase in this budget,” Sen. Minority Leader John McKinney said referring to the $12 million tax exemption on clothing and footwear over $50. The sales tax exemption was supposed to be reinstated in the 2015 budget.

House Minority Leader Lawrence Cafero said the governor is still claiming credit for implementing the tax break because he throws it in fiscal year 2016, the “very fiscal year he says he doesn’t care about.”

That is unless, it’s one of his budget priorities like the income tax exemption on retired teachers pension, Cafero said. The retired teachers pension exemption was deferred until 2016 and will be lowered from 25 percent down to 10 percent, according to Malloy’s budget director Ben Barnes.

“On the one hand when it’s good: let’s look forward to 2016. When the news is bad, we’re not going to pay attention to that,” Cafero said.

The tax exemption on over-the-counter medication was deferred for nine months.

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(11) Comments

posted by: Stan Muzyk | May 2, 2014  1:27pm

Gov. Malloy and Democrats aren’t worried—but taxpayers will continue to be buried.  Voters should take an intelligence test before they vote. “If they are not smarter than Fifth-Graders—they shouldn’t vote.”

posted by: ocoandasoc | May 2, 2014  2:31pm

More smoke and mirrors.
The deficits are only on paper. The deficits are based on assumptions that are not real world.  The economy has turned the corner.  We’re going to lower taxes sometime in the future. There will be no tax increase. We’ll have a balanced budget. We won’t spend more than we take in. We’re going to live within the budget. Projected spending increases will not be replicated.
Excuse me for being skeptical, but, as Yogi used to say, “It’s déjà vu all over again.”
Two things ring true in this article, though.  First, the Governor’s statement: “I don’t care what the number is.”
Second, Christine Stuart’s comment: “But going from a $3.6 billion deficit to a $1.3 billion deficit that won’t be a deficit because ‘I say so’ is a tough spot for Democrats to be in an election year.”
BTW, if the legislative analysts are so bad (and they are!), why not fire them all and get some people who can count and know how to use the same standard accounting principles the IRS requires the rest of the nation’s entities to use?  Wait… wasn’t that one of the Governor’s campaign promises four years ago? But then maybe the plan is to borrow more money next year to be sure they can really have a “surplus.”

posted by: jim black | May 2, 2014  2:59pm

No surprises here. The low information crowd will buy it hook line and anvil. Then after the election hold onto your wallets as you flee the state. The new taxes will be coming fast and furious.

posted by: Not that Michael Brown | May 2, 2014  4:07pm

@Stan Muzyk - Then I guess you won’t be voting.

posted by: Fisherman | May 2, 2014  5:24pm

Spending exceeds income?

Not a problem. Between my unabashed pandering to the unions, retroactive income taxes, bus-way and restrictive gun laws, I didn’t figure I was gonna win in November anyways.

Let Foley fix it.

posted by: dano860 | May 3, 2014  8:19am

ocoandasoc, correct on those analysts and the two clowns at UCONN. They even have Cartensen weighing in on the fate of football at UCONN.
All we need to keep in mind when listening to Dannel, when his lips are moving, he is ______. (You fill in the missing word)

posted by: DrHunterSThompson | May 3, 2014  10:00am

DrHunterSThompson

Time for new leadership, all the way around.

HST

posted by: Lawrence | May 3, 2014  12:56pm

“spending exceeds income?”

Note to ‘wingers with short memories or no facts: the CT GOP budget is $2 billion underwater in FY 16-17, another billion-plus underwater in 2018.

posted by: dano860 | May 3, 2014  3:42pm

Note to Larry, as a left winger my suggestion is to get your gang to run the tax flag back up the pole. Dannel could use another billion or two. Let’s see how fast the people that collect checks from us go after more union ransom, negotiated with the socialist Malloy, raises. Heck the more they get the more they mismanage, let’s see how fast the top 10%ers flee the State. Let’s see how many business people bail to other States. Heck right now we are only #1 in tax burden. We need to go for the stratosphere. He has already lied to us on the no new tax claim.
It really doesn’t matter what your retort will be, we know where you are coming from.

posted by: Doug Hardy | May 3, 2014  4:14pm

Hi folks - thanks for all these comments and please do feel free to continue the discussion!

Unfortunately, we have had to delete a few comments because they have violated various parts of our comment policy.

I would urge folks to give that policy a read before making baseless allegations of criminal wrongdoing about anyone, or engaging in name calling, or simply being uncivil.

Thanks!

posted by: Fisherman | May 4, 2014  4:33pm

...last one leaving Connecticut… Please turn-out the lights.

See ‘ya all in Florida.