CT News Junkie | Deficit Hits $365M

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Deficit Hits $365M

by | Nov 14, 2012 3:29pm
() Comments | Commenting has expired
Posted to: State Budget, Taxes

Christine Stuart photo

Ben Barnes

(Updated 3:54 p.m.) The numbers haven’t been certified by the comptroller, but Gov. Dannel P. Malloy’s budget director told the legislature’s Appropriations Committee on Wednesday that the state is running a $365-million deficit.

That means the administration will have to present a deficit mitigation plan to the General Assembly before the end of the year, if the comptroller certifies the deficit on Dec. 1.

In his presentation to the Appropriations Committee on Wednesday, Ben Barnes, told lawmakers that he’s already working on a plan and will submit one before the end of the year.

“Please know that my office has already begun work on this plan, and while I’m not prepared today to address any elements that might or might not be included in that plan, you can expect that we will announce specifics as soon as possible,” Barnes said.

Under state law, the governor must submit a deficit mitigation plan to the General Assembly when a budget deficit reaches 1 percent of general fund spending in the $20 billion 2013 budget.

The largest amount of the deficit is attributed to the Medicaid program for low-income adults.

Barnes said the Medicaid deficit accounts for about $260 million of the shortfall, largely attributable to an increased utilization of medical services and increasing caseloads.

“The enacted budget did not assume the current caseload of 83,827 would be reached until August 2013,” Barnes said.

The state is seeking a waiver from the federal government that would kick about 13,000 individuals off the Medicaid program, but no decision has been made yet.

Hugh McQuaid Photo

Gov. Dannel P. Malloy

Earlier Wednesday afternoon at an unrelated event, Malloy was asked by reporters what he plans to cut in order to balance the budget.

Malloy said those decisions have yet to be made.

To complicate matters slightly, Malloy also is in the process of developing a two-year budget that he will present to the new legislature in February.

“What would really be nice is if they would settle some of these issues in Washington so that the budget I present in February actually builds in whatever changes” are made, Malloy said. 

Malloy and Barnes both expressed hope that the state may benefit from a one-time revenue spike generated by people selling off capital gains this year in an effort to avoid new federal taxes next year. Although that may help in the short term, neither are banking on it because it won’t keep the budget balanced in the out years.

Following his testimony, Barnes said he wasn’t sure when the deficit mitigation plan would be completed. He said his office still had to send their estimate of the deficit over to the state comptroller, who will need to certify it in a letter on Dec. 1. The plan probably won’t come before that happens, he said.

Barnes said it was too soon to say what would be on the table for potential cuts.

“Government spending. State government spending. That’s about as specific as I’m going to get,” he said. “... You act as if I have in my mind a full list of what we’re going to do and I don’t yet. We’re working hard to do that. Until we get through that process and work with the governor and make sure we’re right on what the deficit is going to be, it’s way premature for me to discuss what any kind of plan in the future’s going to be.”

Hugh McQuaid Photo

House Republican Leader Larry Cafero

House Republican leader Lawrence Cafero said no stone should go unturned as the governor examines where to cut state spending.

“I think everything has to be on the table. It has to be at this stage. In 2009 and 2011, we raised taxes in each of those sessions by, what, $3 billion plus? We’ve borrowed all we can borrow. There’s only one leg to the stool left—cutting spending, which we never did,” he said. 

Cafero said it was important to preserve the social safety net as much as possible, along with making every effort not pass the burden on to the state’s cities.

Cafero accused Malloy of not having made substantial spending cuts since taking office. He said the savings estimated under last year’s state employee benefit concession package haven’t materialized either.

“We keep making the same mistake over and over and over again. The difference is we have a governor who’s big on bravado and spin, and tries to talk about ‘I, I, I. I did this, I did that. P.S., we’re right back where we started,’” Cafero said. 

In addition to spending cuts, Cafero said he would start by weeding out fraud in the Social Service Department programs.

“Before you even cut spending lets look at the low-lying fruit and the fraud that went on. We have submitted that fraud is probably approaching a quarter of a billion dollars,” Cafero said.

He said Republicans were laughed at when they proposed hiring 20 additional Medicaid fraud officers. Their salaries would have been subsidized by the federal government and each could have been responsible for several million dollars in prevented fraud, he said.

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(10) Archived Comments

posted by: sonofduffydyer | November 14, 2012  4:33pm

Gee, what a shock that a politician would suddenly realize, 5 minutes after an election, that the State actually has a huge and growing financial problem!  Huh, imagine if a Governor got up and pledged ‘shared sacrifice’, boldly said he got major give backs from the state employee group and as a kicker even got them to commit to a couple hundred million in future (imaginary) creative give backs.  Wait, that actually happened and is not a dream!

posted by: JamesBronsdon | November 14, 2012  5:35pm

San Bernardino California has a “plan.”  Perhaps they’ll share it with us.

posted by: William Wallace | November 14, 2012  7:12pm

Malloy, like his idol Obama, truly feels it is THEIR time. Spend & Tax ultra liberal - socialist ego maniacs that now have control - and - we will be sorry for that misfortune.

Mallo now wants a Cabinet Level group to follow Obama Care ? He has a small army of techno crats at DSS doing this already but we need more ?

Ultra Liberal Democrats who spend more and more money for more and more programs with higher and higher taxes and have no clue that this cannot continue.

Having worked inside of State Govt for decades I can assure you the actual numbers are much higher - and the deficit for 2013 is more likely $800 million.

When will it end ? Maybe with Malloy packing up and heading to Washington to be with his mentor in some sort of worthless appointed position spending other peoples” money on the Federal level.

posted by: GoatBoyPHD | November 14, 2012  7:47pm

GoatBoyPHD

Why certify a moving target? Wait until estimated taxes come in and the stock market losses are factored in. Note the market today? There’s more of that coming down the road.

posted by: andygayle | November 14, 2012  9:56pm

Maybe it’s time to ask the unions for help. Oh, they did that already. It’s time for the legislator’s and college presidents to give back like the unions did.

posted by: Noteworthy | November 14, 2012  10:13pm

This deficit was completely avoidable. It’s not just medicaid - try looking at the tax credit piggy back that shrinks the tax base; allows people to live here totally free of any cost for anything. The first year, this new welfare program cost taxpayers more than $125 million - it was set to increase this year. I’ll bet it represents at least half of the projected deficit. By the way, this will not be the end either. The deficit will grow higher as projected and ignored by Malloy. Record tax increases combined with record spending increases and no decreases. We’re surprised? No.

posted by: BMS | November 15, 2012  10:26am

The revenue estimates will continue to drop. The 16,000 people a day that will be riding the New Britain to Hartford Busway, means a drop in gas tax receipts.

posted by: timelord | November 15, 2012  10:48am

They can start by eliminating the Earned Income Tax Credit…

posted by: skyrocket27 | November 15, 2012  11:03am

At some point we shouldn’t be surprised by news like this.  Governor Malloy and all his lackys are not equiped to do this job.  Least of all Secretary Barnes who seems more inclined to find fault with Republican proposals then to invite their assistance in working through the fiscal problems created under Governor Rell, Speaker Donovan and Senate President Williams.

posted by: johnnyb | November 15, 2012  11:59am

Don Williams is back and it will be interesting to see where he looks for extra revenue. He probably is still waiting for that economic recovery to fill in the gaps.  The Governor should eliminate all the Department spokesman at 6 figures a pop and let the Deputy Commissioners speak for their departments. The legislators also need to have serious reductions in staff.