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Malloy Asks For More Spending To Build ‘Economic Revival’

by Hugh McQuaid | Feb 8, 2012 5:31pm
(3) Comments | Commenting has expired
Posted to: State Budget, State Capitol

Hugh McQuaid Photo

Gov. Dannel P. Malloy

Having solved a $3.67 billion budget deficit during his first year with an unpopular mix of tax increases and union concessions, Gov. Dannel P. Malloy’s second budget recommends increasing spending by $329 million to help build an “economic revival.”

“Some people will surely say an economic revival is beyond our grasp, that I’m asking too much, that I’m setting an expectation that is too high. They’ll say we should be content to just make progress. I say those people are dead wrong,” Malloy said.

Money for the new spending would come from next year’s surplus, which Budget Director Ben Barnes projects at $438.5 million. The governor, in a 39-minute televised address, asked a joint session of the General Assembly to support his plan to direct $128 million in additional funds to education, $103 million on maintaining the social safety net, and $123 million in additional payments to the pension fund.

“Those who will criticize a modest spending increase designed to fund education reform and make an additional pension payment are really saying that we should maintain the status quo in our schools, and that we should force our children to pay for our pensions,” Malloy said.

While most lawmakers were supportive of the ideas Malloy laid out, Republicans wondered if the projections will hold since this year’s budget is already $73.6 million in the red.

House Minority Leader Lawrence Cafero praised the governor’s speech as well written and full of optimism. He pledged a lot of bipartisan support for Malloy’s education reform ideas. But he said doesn’t believe the state’s economy is doing as well as the Malloy administration claims.

“We’ve heard over the last month some warning signs that things aren’t going as well as the governor said. I hope those experts are wrong and the governor is right, but we as legislators have to be prepared. Because if things go south, as they are trending to do, then all of the wonderful reforms the governor spoke about today will not come to pass,” Cafero said.

Cafero said that some of the things Barnes said during a budget briefing Wednesday ignore important considerations like the size of the deficit. Malloy is planning to spend almost a third of a billion dollars more than budgeted while ignoring a decrease in state revenues, he said.

“We’ve got to be cautious. If not, this dream, this beautiful dream this governor outlined, will crumble,” he said.

Senate Minority Leader John McKinney pointed to low housing sales in the state, which he said are a strong barometer for economic recovery.

“We’re continuing to increase spending above and beyond what our budget can sustain and what our spending cap can sustain,” he said.

McKinney said he was in agreement with Malloy in that he doesn’t think simply spending more money on education can fix the problem.

“It’s how and where you spend the money and holding people accountable to spend it the right way,” he said. “We’ve been pushing for that for years. But you can still look at your $20 billion budget, find savings of $120 plus million and replace that spending with better spending on education reform.”

Malloy’s budget does cut about $120 million. Most of those cuts come from changes to the Low-Income Adult Medicaid program.

“Yes, we will have to cut some spending and forego some things we wanted to do over the course of the next few months, but make no mistake about it: we will end this year in the black,” Malloy said.

Democrats expressed confidence that would be the case.

House Speaker Chris Donovan said that while lawmakers should be careful about the deficit, a year can make a big difference in the budget.

“The governor says we’ll balance the budget, the numbers I see in the budget will be balanced. I think it’s time we be aggressive about creating jobs and again we all know we need to do something about education,” Donovan said.

Senate Majority Leader Martin Looney said the budget deficit will be a relatively minor problem.

“If you look at it as a percentage of the overall budget, it can be handled, as the governor has indicated, by making adjustments in certain spending that may need to be reduced in some categories,” he said. “It’s not a major issue that will deflect us from our purpose.”

Senate President Donald Williams said that there’s still more work to be done to improve the economy but the governor was right to pair education with putting people in jobs.

“The governor has pledged to have a balanced budget and we’re taking the same approach in the legislature,” Williams said. “Already with the proposed rescissions and other possible cuts, we see absolutely having a balanced budget.”

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(3) Comments

posted by: hartfordresident | February 8, 2012  7:14pm

He is spending more than $300 million in taxpayer dollars trying to attract companies to the suburban sprawl of Hartford.  (cigna, jackson, espn, etc.).  That’s a recipe for furthering the divide between minority/young/low income residents and wealthy suburban whites. Whatever happened to smart growth? Clearly it’s gone completely out the window. The State will pay dearly for these mistakes.

posted by: Reasonable | February 8, 2012  8:55pm

hartfordresident:  Our mistake was electing Gov.(Dan the bankruptcy man)Malloy, and we are
are already paying for that mistake—ten-fold.
And our big-spender isn’t finished—unfortunately.
No one can stop him, until he is voted out of office.
Malloy still has plenty of opportunity to continue to bury this state into virtual bankruptcy.

posted by: Noteworthy | February 9, 2012  12:19pm

A couple of observations:

1. It’s real easy to be bold with other people’s money.

2. Our fiscal house is hardly in order - it is a quagmire of debt and operational expense that is unbalanced and that walks the highwire of risk. If it were in such good shape, the OMB could quantify the union savings and we would not currently be projecting a $100 million deficit and growing. This year alone, that’s nearly a quarter billion swing from just 6 months ago.

3. Malloy proposes all this new spending without raising taxes or running a deficit by shifting operational expense to the capital budget - essentially borrowing and using bond funds to pay for basic government activities that are line item budgeted and have always been considered operational expenditures. This is stupid and shortsighted. The Legislature and Rell did that for two years and ran up the debt by another $1.5 BILLION just to keep from cutting spending. Didn’t Malloy criticize this and promise no more? 

4. Malloy can talk about revival all he wants. The business climate and taxes suck. There are punitive regulations that hold back small business.  The bottom line is that taxes in Connecticut by any measure are the highest in the nation especially when a large number of residents contribute nothing to the tax burden. That means consumers/taxpayers have smaller and smaller checks with which to drive the economic prosperity Malloy pretends he wants. His latest tax spree made economic revival a myth and life support a reality. The question for most of us is when do we pull the plug?