In less than ninety days, the state’s fiscal year (FY12) will come to an end. The day will mark the completion of Governor Malloy’s first fiscal year budget.
We sometimes forget that when Dan Malloy was sworn in as Governor Dannel Malloy back in January 2011, the state was functioning under a budget developed by Governor Rell and the Democrats in the Legislature.
It wasn’t until July 1, 2011 that Governor Malloy’s first state budget took effect. The “Fog of Time” probably clouds our recollection, but some will remember that Governor Malloy came into office facing an upcoming budget short-fall of more than $3 billion dollars.
After $1.5 million in new taxes, significant budgets cuts and a Malloy/SEBAC state employee agreement that included a wage freeze, changes in health benefits and a variety of other “projected cost savings”, the Legislature passed and the Governor signed into law a budget that purportedly contained a surplus.
Now with three months left in the fiscal year, Gov. Malloy and his budget chief, Ben Barnes, continue to hold on to their fantasy that the state presently has a small surplus.
Meanwhile, the General Assembly’s nonpartisan Office of Fiscal Analysis is predicting the state budget will end $120 million in the red – assuming that the Malloy administration follows through on its promise if allocate $75 million in a first step toward shifting the state to Generally Accepted Accounting Principles GAAP).
For the past nine months, Connecticut Comptroller Kevin P. Lembo has been in a difficult position. As Connecticut’s fiscal watchdog he has the obligation to put politics aside and report the actual state of affairs when it comes to Connecticut’s budget.
On the other hand, we’ve all seen that the Malloy administration is not only thin-skinned but quick to bully and assault anyone who criticizes them, even when the criticism is fair and accurate.
With that background, Lembo has done an impressive job giving Malloy’s budget projections the benefit of the doubt while still articulating the growing reality that will face Connecticut as the fiscal year comes to a close.
Truth be told, Connecticut’s state’s deficit would be significantly higher if it wasn’t for some handy budget gimmicks that the Malloy administration has been able to utilize including moving money from the last fiscal year into this fiscal year without having to go through the pesky appropriations process with all its transparency, procedures and votes.
Putting aside some “creative” spending strategies, Malloy, Lembo and the Democrats in both the Senate and House are looking to the April 15th tax deadline in the hope that income tax revenues will spike and the deficit will be erased, are at least won’t get worse.
As Lembo said in his press release, “all eyes are on April.”
Meanwhile, the far more “real” and serious problem facing the Malloy Administration’s fiscal strategy is not so much the state budget year that ends on June 30, 2012, but the one that begins on July 1, 2012.
When the legislature first adopted Malloy’s bi-annual budget, the second year which runs from July 1, 2012 to June 30, 2013 (FY13) included a “fiscal cushion” (otherwise known as a surplus) of over half a billion dollars. When it comes to public budgeting 101, the rule is – always try – to have a surplus in an election year. A surplus eliminates the need to raise taxes or cut programs, both of which tend to annoy voters. A state budget surplus also allows incumbents to announce “new” program initiatives at critically important moments during the campaign. (Call it the chicken in every pot campaign tactic).
However, with revenues lower than expected, upward pressure on expenditures and few, if any gimmicks left, even the Malloy loyalists admit that next year’s budget will not end $550 million in the black but more like $6 million.
Keith Phaneuf, the CTMirror reporter who is recognized as the state’s leading expert on the state budget, calculated that the Malloy Team’s margin of error to keep the next budget from becoming a deficit is “less than 1/24th of 1 percent.”
But if you think that’s a problem… Just wait till you see what is lurking down the road.
Malloy’s Office of Policy and Management has already projected that the budget going into the next gubernatorial election cycle would – all else being equal – exceed the state spending cap by $650 million and the budget during the last year of this Governor’s tenure would need to be over $1 billion just to maintain existing services.
Of course, if we sell off our schools to corporations maybe that will save us some money.