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