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Saving The Best For Last?

by Christine Stuart | Feb 6, 2014 6:30am
(6) Comments | Commenting has expired
Posted to: Election 2014, State Budget, Taxes, State Capitol

Christine Stuart file photo

Gov. Dannel P. Malloy

The size of the state’s surplus started to come into focus in mid-January. A week later, Gov. Dannel P. Malloy started holding press conferences to announce some of the adjustments he wanted to make to the second year of the two-year budget.

However, based on what Malloy has made public, it’s clear he’s left a number of surprises for Thursday.

So far, Malloy has proposed giving up about $556 million in tax revenues, and spending an additional $20 million in general funds. It’s unclear exactly how much would be paid for through bonding, aside from the $10 million he proposed to extend a labor program.

Non-partisan legislative budget analysts have predicted the state would face deficits of about $1 billion a year starting in fiscal year 2016, but Malloy has argued there will be no deficits if he keeps budget growth at 2.8 percent.

New Haven Mayor Toni Harp, who was the co-chairwoman of the powerful Appropriations Committee for many years, was briefed on some of the details in Malloy’s budget Tuesday along with other local elected officials.

According to the New Haven Independent, Malloy will increase PILOT funding for tax exempt property, a crucial funding source for urban areas. Last year, Malloy proposed getting rid of the PILOT program. Local elected officials revolted against the changes and were able to convince lawmakers to save the program.

Malloy has not said whether he will seek re-election in 2014.

“If who’s ever governor stays to that average — which is about a 2.8 percent increase in spending, as opposed to by the way, historically, 7 percent — if you stay at 2.8 percent in expenditures and you see some continuation of growth on the revenue side there is no deficit,” Malloy said last week.

Malloy started his budget adjustment tour with a proposal to boost spending on mental health services and training on Jan. 24.

He wants to spend $250,000 on an anti-stigma media campaign, $2.2 million in new funding for 110 Rental Assistance Program vouchers, $5 million to increase mental health services to young adults and other difficult-to-reach populations, and crisis intervention training for police officers.

Three days later, Malloy announced $13.6 million in funding for job seekers.

His proposal called for bonding another $10 million for the existing Subsidized Employment Training Program (STEP UP), which subsidizes the salaries of new employees for the first six months they’re on the job. It would also use $3.6 million to establish a program, called Platform to Employment, which involves behavioral health services and financial advice. That program includes a subsidized internship designed to reduce the risk for potential employers.

Two days after that, he called for separating the new teacher evaluation system from the Common Core Standards, which are being used by about 70 percent of school districts. While it wasn’t technically part of his budget proposal, the federal waiver the state received to delay the coupling of the two systems is bound to cost the state money.

Already, the state has spent more than $22.6 million in bonding to upgrade computer systems and wiring necessary to administer the Smarter Balanced Assessment Tests.

A day after that, Malloy zipped down to Derby City Hall to announce plans to use $155 million in surplus funds to give 2.7 million taxpayers a $55 tax refund. In addition, Malloy proposed using $250 million to bolster the Rainy Day Fund and make an additional $100 million payment to the state’s pension fund.

On Jan. 31, Malloy proposed exempting 50 percent of teachers’ pensions from state income tax.

In addition, he proposed exempting over-the-counter medication from sales tax, a two-day state park fee holiday, exempting municipal health care plans from insurance premium taxes, and extending an angel investor tax credit. The proposals total about $51.5 million in 2015 and $52.9 million in 2016.

By Monday, Malloy targeted the most reliable voting constituency with a proposed increase in the state’s contribution to the senior citizen rental rebate program by $6.5 million.

The governor said those added dollars would enable another 12,700 residents to receive rental assistance from a program that already serves roughly 40,000 people. Because Connecticut has one of the oldest populations in the country, Malloy said the phaseout of the program, which his administration called for a year ago, was “now unacceptable.”

Nora Duncan, state director of AARP, said her group’s internal polling suggests that around 40 percent of voters who cast ballots in Connecticut elections are AARP members, which means they are over the age of 50. 

Malloy’s last pitch before the snow postponed his State of the State address was a three-year phase-in of a minimum wage hike.

Republican lawmakers say the proposed hike in the minimum wage was ripped from the Democratic National playbook. They also said the economy hasn’t improved enough to support the hike.

Malloy will address the General Assembly Thursday at noon.

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(6) Comments

posted by: DirtyJobsGUy | February 6, 2014  9:23am

I like to follow the actual reports on state revenue (note to reporters life does not center on delivering tax money to the state).  So the surplus is due to increased capital gains from a booming stock market (salaries and sales tax are moribund).  The recent stock market correction (still ongoing?) will produce losses which will not only not generate tax revenue but will reduce it. If the surplus were due to a general improvement in the economic climate you could play with it, but from a financial cycle it should be used to buy down debt.

Wasn’t Ol’ Lowell Weickers claim that the income tax was going to be more predictable than the sales tax?

posted by: JAM | February 6, 2014  9:53am

They borrowed more than the predicted surplus puportedly for “GAAP” conversion.
Consequently,they have a surplus only if you count the borrowed money as “revenue” which clearly it is not.
The irony is that if they actually went to GAAP, it would not be counted as revenue, and there would be no surplus.
Chistine, an autopsy of how this “sur[plus” came to be is in order.

posted by: StanMuzyk | February 6, 2014  10:55am

The Malloy administraion arriving at an artificial state budget surplus is in reality “the manipulation of
of a Ponzi scheme.”

posted by: Matt W. | February 6, 2014  11:46am

Matt W.

JAM you’re 100% right on. They borrowed the money under the guise of GAAP conversion and now it is being counted as a surplus! Smoke and mirrors. Knock me over with a feather.

posted by: Chien DeBerger | February 6, 2014  12:55pm

As one radio talk host noted after the recent election for the POTUS: “You can’t run against Santa Claus.” And oh Danny is making that his big play for the votes. Because unfortunately it works. We now have more people who want Santa Claus versus those who would want to work for a better place in life on their own.

posted by: StanMuzyk | February 6, 2014  2:19pm

@Chien DeBerger: You are 100% correct. Gov. Dannel Malloy follows in the footsteps of our national Santa Claus—Pres. Barack Obama—
who’s gifts to voters at taxpayer expense—gave him the national social benefit winning votes for reelection.  That’s why our country and the State of Connecticut are fiscally sinking from deficit spending. Democratic prosperty is a dishonest myth, when it is a blend of Socialism and Communism..