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CT’s Budget Goes From Bad To Worse

by Christine Stuart and Hugh McQuaid | Nov 15, 2012 2:10pm
(20) Comments | Commenting has expired
Posted to: State Budget, State Capitol

Hugh McQuaid photo

Gov. Dannel P. Malloy

Connecticut’s budget outlook went from bad to worse Thursday when the Office of Policy and Management reported that the state is projecting $1.18 billion shortfall for fiscal year 2014 and a $959 million shortfall in 2015.

That’s on top of news the state’s fiscal year 2013 budget is already $365 million in the red.

Despite the bad news, Gov. Dannel P. Malloy remained optimistic about the situation.

At a Capitol press conference following his monthly commissioner’s meeting, Malloy said he won’t raise taxes to close the $365 million deficit and he has “no intention” of raising taxes to close the two-year budget shortfall.

Pressed about why he won’t pledge not to raise taxes, Malloy said bluntly that he almost lost an election because he refused to take a pledge like that.

“I’m giving you as definitive language as I am comfortable giving you at the moment,” Malloy told reporters.

If state Comptroller Kevin Lembo certifies a $365 million deficit on Dec. 1, the governor has 30 days to present the General Assembly with a deficit mitigation plan. In February, he will present his two-year budget, which will have to close a projected two-year, $2.13 billion deficit based on the numbers presented Thursday.

Ben Barnes, Malloy’s budget director, said he’s not “shrinking away” from the current budget woes, which are less severe than when Malloy first took office.

Admittedly, there are far fewer ways to close the budget deficit over the next two years, but Barnes said he’s up to the challenge.

“We need to solve the problem through reduced spending,” Barnes told the commissioners Thursday.

Malloy assured his state agency commissioners that the state will live within its means and acknowledged that it “means we’re going to have to make some painful spending cuts.”

He said $365 million is a tenth of the $3.65 billion deficit he inherited when he took office. He said his administration solved 90 percent of the problem in his first 22 months, while it took Republican governors 22 years to create the problem in the first place.

On Wednesday, House Minority leader Lawrence Cafero said the budget gap would grow and suggested the administration was being less than transparent in reporting the shortfall.

“What you see now is just a precursor. It’s going to grow,” he said.

Malloy pushed back Thursday, saying Cafero’s comments were colored by his aspirations to run for governor. He suggested reporters should mention as much in their stories.

“He’s wrong. Rep. Cafero has expressed his desire to become the governor of the state of Connecticut. I think you folks are going to have to get used to putting everything in context. I’m sure that will appear in your papers every time you report what he has to say,” Malloy said.

The governor said information was released as it became available and pointed out that the fiscal year doesn’t end until July, making the current budgetary gap a shortfall rather than a deficit.

“It’s not going to be a deficit. It’s going to be addressed,” he said.

Cafero said he hasn’t declared he’s running for governor, nor has he explored for it. He said he’s been consistent with his criticism, regardless of what he may do in the future.

“This is factual, this isn’t my take on it, I’m not editorializing it and I don’t need to put it in context. That things have all of the sudden, overnight, been dramatically worse,” he said.

The administration went from projecting a $52 million revenue shortfall to estimating a $365 million gap in the budget, Cafero said.

“That means every day that goes by in this fiscal year, we are spending a million dollars more than we’re taking in,” he said.

As far back as March of this year, Malloy’s budget office had anticipated using a 2012 surplus to help balance the 2013 budget. When the surplus turned into a deficit is when the General Assembly decided to delay paying off the borrowing in did in 2009 to balance this year’s budget.

But less than five months into the fiscal year, that budget may already be $365 million in the red and the 2014 and 2015 budget projections are already running a $2.13 billion shortfall.

In addition to the shortfall, the fiscal year 2014 budget spends $1.24 billion over the state’s allowable spending cap. In fiscal year 2015, it’s $1.81 billion over the spending cap.

So no matter what happens, the Malloy administration will have to cut spending if it wants to stay under the statutory spending cap.

“Extraordinarily difficult decisions to reduce spending will be necessary,” the report released Thursday says.

This means programs and services will need to be reduced or cut in order to balance the budget. But Malloy declined to say exactly where those cuts would be made.

“Everything is on the table, but you actually know who I am and where I come from, so you can understand that some things are lower, at different places on the table,” Malloy said responding to a question on possible cuts municipal aid.

A former mayor for 14 years, Malloy has preserved and in some cases increased funding to municipalities during his first two years.

Human services account for about 29 percent of the annual state budget, and grants to cities and towns are about 14.2 percent of the annual budget.

The agreement Malloy made during his first year with the state employees protects most of them from any wide-scale layoff over the next two years.

And for those state employees hoping for an early retirement incentive, Malloy said the state does not pay people to retire.

“Because it further burdens the retirement system, which none of my predecessors funded properly,” Malloy added.

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(20) Comments

posted by: Jim in Mfg | November 15, 2012  2:48pm

“state is projecting $1.18 million shortfall for fiscal year 2014

That is Billion not Million.

posted by: Jim in Mfg | November 15, 2012  2:51pm

Per Malloy:  “Everything is on the table…”

This isn’t true.  Layoffs are off the table for another 2 years

posted by: ConnVoter | November 15, 2012  3:33pm

Gov. Malloy needs to pull off his best Scott Walker impersonation.  Walker went head-to-head with the unions and won convincingly, and Wisconsin was able to avoid layoffs and continue to add jobs (a foreign concept in the land of steady habits):

http://hotair.com/archives/2012/05/23/suffolk-university-study-to-show-walker-reforms-saved-wisconsin-1-billion/

posted by: Christine Stuart | November 15, 2012  4:23pm

Christine Stuart

Caught that. Thanks Jim

posted by: Noteworthy | November 15, 2012  4:48pm

The first step to solving a problem is to quit lying about it. In two weeks, we have gone from having a $60 million problem to $365 million problem to $1.2 billion problem. This is what happens when you increase spending by a billion; increase debt; get insufficient clawbacks from the handlers at the union; while layering on more welfare and shrinking the pool of taxpayers. The basic (+) and (-) options on Malloy’s tablet seem to have escaped him. In the plus column would be the hundreds of thousands he’s spent on needless increased security; unlimited overtime for his personal body guards and drivers and god knows what else. Bottom line is we’re in as deep a hole as when he started. So much for the promise of a new day, and a problem solving governor.

posted by: joemanc | November 15, 2012  4:52pm

“He said his administration solved 90 percent of the problem it took Republican governors 22 years to create in his first 22 months..”

Christine - again, I plead with you to ask the governor why he continues to blame only the Republican governors when the legislature was run by Democrats? It was a mutual effort.

posted by: JAM | November 15, 2012  5:14pm

Guess we can forget about all that talk about GAAP Accounting. Taxes will go up, and spending cuts will be promised, but never materialize. And the spiral into the fiscal abyss will accelerate.

posted by: perturbed | November 15, 2012  9:52pm

perturbed

Here’s a question maybe Christine could help us all out with:

How many hundreds of millions of dollars has Malloy given away in corporate welfare in the past year? And since taking office?

Have you kept a tally? (I lost count.)

Another question that comes to mind is this: Do the projected budget shortfalls in future years assume roughly the same, less, or more public funding handed out to the likes of insurance companies and hedge funds than in the past two years? (Maybe the $1.24 billion projected shortfall in 2014 could be cut roughly in half if he gave away a half billion less to his corporate buddies in 2014.)

—perturbed

posted by: turbotennis | November 16, 2012  7:18am

This is an outrageous situation facing our state! Malloy can’t project accurate figures! The House has been less than responsible in their past budgeting. Don’t forget to add the Governor’s estimate of Sandy’s impact upon the small businesses in CT…360 million dollars. It seems from the Governor’s comments that he is more concerned about
Rep. Cafero’s POSSIBLE run for Governor than proposing viable solutions. Hmmm. Maybe Rep. Cafero should throw his hat in the ring for 2014!

posted by: state_employee | November 16, 2012  8:41am

Please, Cafero, Please run.  We need you.

posted by: justsayin | November 16, 2012  9:55am

My understanding is the multi-million dollar suggestion box has not runnith over with ideas. Perhaps we should repeal the no lay-off clause until those agreed upon savings materialize. Seems like a fair exchange union got theirs now the rest of us want our end of the bargain.

posted by: christopherschaefer | November 16, 2012  10:03am

“Blue State CT” voters continue to elect a Democratic majority for “progressive ideological” reasons. Yet we already have same-sex marriage, liberal abortion laws and have been implementing mandated aspects of ObamaCare. In reality the more contentious “social value” issues increasingly are decided by the courts—not by elected officials. So when you continue to vote for a Democratic majority in the state assembly what you REALLY are voting for is more deficit spending, necessitating more taxes. The problem really begins with Congress, where entrenched, careerist politicians of BOTH parties continue to rack up the federal debt. Consequently state budgets that count on federal dollars come up short, because of federal deficits. Voters need to wake up and vote ALL the bums out in 2014.

posted by: JamesBronsdon | November 16, 2012  11:26am

We’re getting national notice

Did not know, but am not surprised, that Barron’s has determined Connecticut is the worst run state in the nation.
Culture of arrogance.

posted by: Reasonable | November 16, 2012  1:17pm

One-party Democratic rule—continues to bury the state, and Malloy, like Pres. Barack Obama knew, he can’t lose, in a great entitlement state, which patterned by our national vote—which won the presidential election in buying the votes to win. The deficit spenders continue to win—as long as half of our people are looking for—and getting—something for nothing.  We have cultivated the wrong voters for the future of America—for votes that are sending our country into bankruptcy.
The Democratic National Committee calls it “Democratic prosperity” that won an election—but the United States of America LOST, big time!

posted by: Upset.Citizen | November 16, 2012  8:39pm

Upset.Citizen

The do nothing managers have no lay off protection… how about letting half of them go?  It would save money and we’d get more done!

As for the suggestion box, the union filters what the members/workers submit! If it makes a stupid manager look bad it goes nowhere!  I know! I made suggestions that would save hundreds of thousands of dollars!  How about an email address at the Gov’s office that we can make suggestions to?

posted by: stellathecat | November 17, 2012  11:31am

Upset Citizen,  Relax, sit back and have a cup of tea. Calm and reasonable men will allay all your fears.

posted by: Upset.Citizen | November 17, 2012  5:40pm

Upset.Citizen

@stellathecat - Huh? My comments relate to this article, what are you talking about?

There are factors with the employee suggestion box that people do not realize - the suggestions go to the unions, who know nothing about what we do for work, and they filter the information to management/Malloy…  Trust me, our union reps are not very smart!  This task is above their abilities!

Also, managers do not get the layoff protection.  When you consider their longevity and salaries and ratio of managers to workers it is clear there are too many of them and they make too much for what they do! 

The bean counters need to focus on what can go and what needs to stay in place…  It’s pretty damn clear that the case worker at DSS is needed but the 10 levels of management above that person should have to account for their existence!

I repeat myself - why can we not have an email address we could submit our suggestions too without the union interfering? 

UC

posted by: Wakewhenover | November 18, 2012  3:19pm

Upset Citizen:  DSS does not have that many managers at the field level (probably one for every 70 workers) and that is erring on the low side.  Stop playing class warfare at the state employee level.  Blame this Governor who has his marching orders from Manchurian candidate Obama.

posted by: Upset.Citizen | November 19, 2012  6:46am

Upset.Citizen

@Wakewhenover - Funny, when the words are against the people who actually do the work you are silent…  It’s all on ctsunlight pal! The number of manager vs the number of workers and the $$ they take in!

Out of 50 managers there is maybe 1 that can manage! For every 12 workers there is 1 manager somewhere! Most run around kissing butt and making stuff up to try to make themselves look good!  We are top heavy! Get rid of many of the political appointees and friends of friends who did not work their way up and know nothing about the position they are in or the work their people are in charge of! Promoting from within based on productivity provides the public more value for their dollar - not just in quality workers but also in the final product!

Do you know that the job specs for just about every worker position requires some kind of licensing or degree but most management position have little or no educational requirement?  Look it up for yourself!

UC

posted by: Reasonable | November 19, 2012  11:24am

ConnVoter:Gov. Malloy will never do a Scott Walker impersonation in Connecticut—as he is a die-hard Obama Democrat—who used the unions in winning an election to keep us on the road to bankruptcy that “he keeps adding fuel to the fire!”