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Second Round of 2015 Budget Cuts On The Way

by | Jan 20, 2015 9:27pm () Comments | Commenting has expired | Share
Posted to: State Budget, Taxes, State Capitol

CTNJ file photo Gov. Dannel P. Malloy will be forced to order a second round of budget rescissions because his budget office Tuesday projected a nearly $121 million deficit for fiscal year 2015.

Malloy ordered $54.6 million in rescissions in November, but declining revenues and a $120 million deficiency in the Medicaid account has increased the budget deficit by $89.3 million since last month.

“We will announce additional rescissions in the very near future, and additional actions may be required to address the projected change in operating balance,” Office of Policy and Management Secretary Ben Barnes said Tuesday in his monthly letter to state Comptroller Kevin Lembo.

Revenues have declined $39.3 million since last month and spending is running $22.8 million above the budget. The biggest deficiency on the spending side is in the Medicaid account.

“A net Medicaid shortfall of $120 million is projected due to increased enrollment, difficulties in achieving the full savings levels incorporated in the budget for the medication administration and step therapy initiatives, additional hospital cost settlements, and revisions to the federal cost share for a small percentage of Medicaid clients who will be reimbursed at 50 percent as opposed to the originally anticipated 100 percent level,” Barnes wrote.

The $121 million budget deficit doesn’t reach the threshold required for Malloy to submit a deficit mitigation plan to the General Assembly. However, that possibility is getting closer.

Sen. Republican leader Len Fasano has been calling on Malloy to meet with Republican lawmakers to allow them to help cut the budget.

Malloy can rescind up to 5 percent of any line item and 3 percent of any fund on his own without seeking legislative approval.

“This was a problem yesterday, and it is an even bigger problem today,” Fasano said Tuesday. “I just don’t get it. Is there simply an inability to talk to Republicans? Every day that goes by without bipartisan action is a step in the wrong direction.”

Fasano said he’s frustrated by the governor’s decision to act unilaterally as the budget situation deteriorates.

“When it comes to state finances, everyone is disheartened by the perpetual bad news. So let’s work together to fix the problem here and now,” Fasano said Tuesday.

But even after finding a way to resolve the new $121 million deficit, Malloy still faces a $1.3 billion deficit in 2016 and a $1.5 billion in 2017. He plans on releasing a two-year budget that will close both of those deficits on Feb. 18.

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(12) Archived Comments

posted by: dano860 | January 20, 2015  11:09pm

...and Dannel says”,Senator Len ‘Who?’
Like magic, everything will be resolved, in a speech, on the 18th!
I attended a meeting today that was also attended by 5 State employees, all from the same office, who showed up in three different State vehicles. Small potatoes but a symptom that has brought us to this point, this level of waste and spending.
If a second round of cuts will be the answer why haven’t they done it sooner? Why not get froggy and go for three?

posted by: Ellen Andrews | January 21, 2015  7:32am

The Medicaid shortfall is puzzling given the amazing data on the stability (and slight decline) of per person costs in the program. That alone has saved the state millions compared to the past and other health coverage programs. The historic refrain “Medicaid costs are out of control” is no longer true. It is not clear how much of the current deficiency is due to one-time, temporary, administrative issues. Medicaid has done its job improving care quality and access while controlling costs.

posted by: art vandelay | January 21, 2015  9:18am

art vandelay

If Len Fasano thinks Malloy will engage Republicans in budget reductions, I have a bridge in Brooklyn for sale.  I agree dano860 in regards to the use of state vehicles.

posted by: rpk31 | January 21, 2015  9:47am

The free pass that Malloy is getting from the media is STAGGERING. This is a guy who, about 10 weeks ago, was laughing off deficits. Celebrating a surplus for this year and waving off the notion of billion dollar deficits in the next two years. Tom Foley was murdered by the media for not having a plan, for giving no specifics, and Malloy was able to skirt by and say it was no big deal.

Turns our his current year budget is off by hundreds of millions of dollars. His “plan”, you know the one that his wife told everyone he had a few days ago, is apparently just to make arbitrary cuts to any program he has the legal right to make cuts to. And does the media kill him for this? Absolutely not.

If the media had an ounce of integrity, these are the questions they would be asking:

1) Governor, you’ve said you won’t raise taxes, won’t cut aid to municipalities, won’t cut services, won’t lay off state employees, and will introduce a huge transportation undertaking. How. Will. You. Close. The. Deficit?

2) Every day, your office puts out a press release detailing how CT is booming under your leadership. Then Governor, why are revenues so far below projections? Shouldn’t they be outpacing projections if the economy has improved so much from when the projections were first made? Or maybe this question should be directed at Kevin Lembo, for a guy who’s been dead wrong so many times he tends to avoid questioning.

3) Why were you so wrong about these numbers? During the campaign, when Republicans were telling the truth about the fiscal condition of the state, you told everyone that Republicans were just rooting for rain on a sunny day. Where’s the sun, Governor?

Malloy is going to break several of his campaign promises. Everyone paying attention knows that he has to. You, the media, need to hold him accountable for those broken promises the same way you held Tom Foley accountable for not having a plan, for not being specific or realistic. Because I have yet to see any of that from our Governor.

posted by: ocoandasoc | January 21, 2015  1:04pm

So the State’s Fantasy Land income projections were off again? What a surprise! And there’s still six months left in the fiscal year and no sign that the projections will continue to be wrong. And if they were so wrong on their short-term projections you can bet they’re wrong on the long-term projections and, as the most objective financial analysts agree, CT faces a nearly $3 billion deficit over the next two years. They may have to start inoculating CT residents to prepare them for the bad news that’s coming. Something’s gotta give, as they say, and - one way or the other - I’m betting it will be the State’s tax payers.

posted by: MyOpinion | January 21, 2015  1:15pm

I just want to support “posted by: rpk31 | January 21, 2015 9:47am”.  Where is the outrage against Malloy for all his campaign lies?

posted by: RogueReporterCT | January 21, 2015  1:18pm


Malloy’s entire campaign was a candidate standing in front of a closet door, a closet full of fiscal skeletons waiting to tumble out.

posted by: justsayin | January 21, 2015  2:56pm

Can you say KENO! Or legalize and tax pot? What is left?

posted by: Bluecoat | January 21, 2015  3:48pm

What else will be coming? Tolls, GPS Tracking devices so that we can be taxed by the mile on top of the 2nd highest gas tax in the country, Betsey Ritter’s Previous “Hoarder Tax” Proposal from 2013 will probably rear it’s ugly head again….

posted by: Biff Winnetka | January 21, 2015  8:48pm

Last night during the State of the Union address, POTUS essentially declared that “Happy Days Are Here Again”.  Maybe CT didn’t get the memo.  Malloy will be waiting a LONG time before the CT economy improves to a point where the Dem inflicted budget carnage can once again be hidden by a thriving state economy.  Connecticut’s fiscal health will only improve after the state has a near death fiscal experience and the Idiots In Hartford™ are then forced to start acting like “spend less than you make” adults.  Until then, CT is best mocked as the silly little insolvent, down the Rabbit Hole state that it is.

posted by: Commissioner | January 22, 2015  7:19am

The Medicaid shortfall is hardly puzzling—the State of Ct now has over 700,000 residents—over 20% of the states population—covered by Medicaid.
That’s not puzzling—it’s out of control and indicative of an ill economy.

posted by: One and Done | January 22, 2015  12:26pm

for our next round of cuts each state worker only gets a 9% raise instead of a 12% one.

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