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Legislative Leaders, Malloy Agree On $350-$370M Budget Shortfall

by | Nov 4, 2015 3:35pm () Comments | Commenting has expired | Share
Posted to: State Budget, Special Session, Taxes, State Capitol

Christine Stuart photo Legislative leaders and Democratic Gov. Dannel P. Malloy agreed Wednesday to close a $350-to-$370 million mid-year budget shortfall after a second round of negotiations.

Last week legislative leaders emerged from their first budget negotiation with Malloy and agreed to determine the size of the shortfall. Now that they’ve agreed, they will spend the next week coming up with suggested spending cuts to fill the hole.

The $350 to $370 million shortfall estimate includes the $103 million Malloy already used his executive authority to cut. The deficit, according to state Comptroller Kevin Lembo is $118.4 million, but lawmakers and Malloy believe it’s not long before that number increases so they identified a larger shortfall.

Legislative leaders from both parties said the $103 million in cuts needed to be included in their proposals because of the impact those cuts had on hospitals and social services.

“Going forward I think we feel very strongly about including the $103 million in rescissions in this number,” House Minority Leader Themis Klarides, R-Derby, said.

House Speaker Brendan Sharkey also said the $103 million has to be back on the table. Sharkey, who caucused last week with his members, said there’s overwhelming support to find other places to cut the budget and restore those funds.

The Connecticut Hospital Association also launched an advertising campaign Wednesday asking residents to tell the governor to restore the funding.

“After five years of cuts and taxes totaling more than $1.3 billion to hospitals in Connecticut, we have reached the breaking point and have no choice but to fight back against the Governor’s dangerous and deeply damaging actions,” Jennifer Jackson, CEO of the Connecticut Hospital Association, said. “Governor Malloy’s cuts have already cost healthcare jobs and forced hospitals to cut back critical services. Enough is enough.” 

Senate President Martin Looney, D-New Haven, said there’s support in his caucus to restore the hospital funding and the money for the Department of Developmental Services and Department of Mental Health and Addiction Services.

Malloy said he’s already cut $103 million so the deficit he’s looking at is smaller. He said he understands lawmakers want to restore some of those rescissions and is willing to entertain that discussion. He suggested eliminating 500 positions in state government through attrition and has already deferred scheduled wage increases for 1,600 non-union managers until January to save about $1 million.

At the same time, Malloy put some changes to the business tax structure back on the table that will cost the state about $25 million.

Malloy is proposing changing the unitary tax structure so that it is only calculated using the sales a company has in Connecticut. Malloy is also proposing a 15-day exemption on personal income taxes from employees who may come to Connecticut to train at a company’s corporate headquarters here.

Christine Stuart photo Malloy also is proposing to restore the 70-percent limit on Research and Development tax credits by 2017 and changing how net operating loss carry-forwards are taxed. Malloy still wants to maintain the 50-percent threshold for losses carried forward by a company into the next tax year, but will exempt companies that continue to pay a minimum tax of $2.5 million.

In order to fund those changes, Malloy will need to find an additional $5 million in the 2016 budget and $20 million in the 2017 budget.

Asked if he was frustrated with the speed of negotiations, Malloy said it’s a process and “everyone moves at their own speed.”

Pressed about the speed of the negotiations, Malloy said he’s always frustrated with that.

“We don’t have an unlimited amount of time, so I’m hopeful people are going to put their ideas out there. I have put mine out there,” Malloy said. “... The purpose of these discussions is to get to a point where everybody else puts their ideas out there. We’re not there yet, but hopefully next week or the week after we will be fully there.”

Despite the governor’s impatience, legislative leaders said the meeting moved negotiations forward.

“We’ve made very good progress since last week. I’m optimistic,” Klarides said.

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(17) Archived Comments

posted by: Biff Winnetka | November 4, 2015  4:57pm

Malloy said…

“We don’t have an unlimited amount of time, so I’m hopeful people are going to put their ideas out there”

He and the Progs spent the last five YEARS blowing up the state budget and blocking common sense budget ideas.  Now he expects solutions proposed immediately??

Can you nominate a State for the Darwin Awards???

posted by: Janster57 | November 4, 2015  5:56pm

1. First admit that they are powerless over their spending, that their budget has become unmanageable.

Eleven more steps and we’re there kids!

posted by: LE 2015 | November 4, 2015  8:21pm

On January 1st our medical premiums will be going up. This will reduce what people can spend. Good luck thinking that the deficit is only $370 million.

posted by: DrHunterSThompson | November 4, 2015  11:25pm

a retirement incentive would clean the place out.  hold your nose and do it. i bet $75M can be saved with a hard hiring freeze.


posted by: jeff672 | November 5, 2015  5:52am

@DrHunterSThompson You are right, a retirement incentive with clear out the state. I know for a fact tho, that close to 50% of the current correctional officers could retire now if they wanted to, thats around 2,300 people there alone, and I know there are other people that are sticking around, just because. So bottom line, you want to clear out the state of senior workers. A ERIP is the way to go.  As you like to say, twist up a fatty and hope, I myself still have 13 years to go.

posted by: Social Butterfly | November 5, 2015  10:27am

The problem facing us now is: “When will the next state fiscal bubble burst?”

posted by: NoNonsense | November 5, 2015  11:02am

According to this article, delaying the raises for the 1,600 nonunion managers until January will save $1 million. Every previous article stated it would save $5 million. Interesting how numbers keep changing, isn’t it?

posted by: Social Butterfly | November 5, 2015  2:27pm

@NoNonsence: News articles are doled out by politicians who whould like you to believe a certain premise they arrive at
any given time. The Dannel Malloy administration changes the deficit state budget numbers often to justify the end that suits there current bargaining needs.

posted by: LE 2015 | November 5, 2015  3:53pm

Early retirement incentive has only made the problem worse. The only answer is to cut the benefits to a reasonable level.

posted by: LE 2015 | November 5, 2015  4:18pm

ERIP is bad idea. You get lower wages but this is offset by higher pension payments and higher medical benefits (for new employees). Old employees still will get medical. This has been done before and does not work

posted by: oldtimer | November 5, 2015  4:24pm

There’s lots of money in the union contracts.

posted by: art vandelay | November 5, 2015  6:51pm

art vandelay

At $350 million, this deficit far exceeds the one Weicker was left with after the O’Neill Administration.  Weicker
resolved the debt crisis with an income tax.  Malloy unfortunately does not have that option.  Connecticut is maxed out so far as raising any sort of tax.

The only options on the table left are cuts and I mean SERIOUS CUTS!.  The first cuts on the table should involve the cost of labor.  It’s the first item private sector companies look at when they are in a similar situation.  Forced retirements, termination of needless positions, cuts in salary & benefits should all be on the table.

Next should be privatization.  Offer state workers their same positions, but with a private company that will bid for the services.

Speaker Sharkey is now realizing the budget drafted into law last July is seriously flawed and needs to be corrected.
Too bad Senator Looney has yet to see the light.

Keno & Suggestion boxes are not going to pull the rabbit out of the hat for the Democrats this time.

Finally this one can’t be placed on the backs of the Republicans.  The Democrats own this mess lock stock & barrel.

posted by: Social Butterfly | November 5, 2015  8:12pm

@art vandelay: The sad part is that our misguided voters have imprisoned us with a prison sentence under Malloy Democratic Socialism for another two years. Their damaging rule is still burying this once great state towards complete collapse.  We continue to decline on a daily interest accruing deficit basis.

posted by: oldtimer | November 5, 2015  9:15pm

Hmmm… maybe we came blame Governor Meskill…

posted by: johnnyb | November 5, 2015  10:32pm

The Departments will never control themselves. Every manager has a pet project they want to spend money on. Analyzing whether these projects are appropriate or needed is not part of the process. Long term planning is never brought up when projects are approved. Taxpayers should have seen the amount of money that was spent at the end of the fiscal year in June. Malloy would have to give each Department staffing levels that are below where they are now and make it a firm number that they won’t be able to increase. One thing about ERIP’s. The longer employees work the more their pension grows. That has an impact on the pension fund as well.

posted by: art vandelay | November 6, 2015  9:13am

art vandelay

The other big problem which has never been addressed is how budgets are formulated. If a department does not deplete their entire allocated budget for a fiscal year, they will not be re-allocated the same budget the next fiscal year. Instead of rolling over unspent funds, departments rush to deplete their budgets for fear of being punished. This practice needs to stopped.  The state could save millions by revamping this practice.

posted by: Social Butterfly | November 6, 2015  4:28pm

@IE 2015:The Malloy Democratic administration has put he state in dire fiscal jeopardy by their unreasosable deficit spending policies. Don’t count on them to try to cut benefits down to a reasonable level as they hve already sold their souls to unions.  They will never try to cut the lofty union benefits as this is the deficit Democratic prosperity that wins elections.

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