As we learn more about the proposed state budget (2-18-11 edition)

Cross posted from Pelto’s Point at New Haven Advocate

As the details of Governor Malloy’s proposed budget are better understood; the positive and negative elements of the budget plan will continue to surface.

Overall, Malloy’s General Fund budget only increases the level of state spending by 1.8 percent, an extraordinary achievement considering the many pressures and challenges that face the state.  The budget also includes some major transportation initiatives that mean when the Transportation Fund portion of the budget is added in to the total the overall state budget is proposed to grow by 2.4 percent.

Malloy resolves the $3.4 billion dollar hole in next year’s budget with about $1.9 billion in new net revenue (including additional federal aid), $420 million in net budget cuts and $1 billion in state employee concessions.

Putting aside the very real problems associated with trying to cut $1 billion from what the state spends on its employees (without massive layoffs), some portions of the proposed budget are increased while others face relatively minor to major cuts.

Over the coming weeks more of these increases and decreases will be highlighted but here are a few of the more interesting additions and cuts.

Although most municipal aid is preserved at present levels, the budget cuts $48 million by eliminating the Payment –in-Lieu of Taxes (PILOT) for Manufacturing Machinery and Equipment.  This funding was provided  to towns to reimburse them for a portion of the taxes they lose since businesses don’t have to pay property tax on certain machinery and equipment.  It is a relatively small hit but does shift the cost of subsidizing the investment in manufacturing from the state to the local property tax payers in those towns with manufacturing companies.

At the same time, the budget adds $15 million for Tourism marketing for the state.

Among the cuts is $6 million due to the anticipated consolidation of campus settings at Southbury Training School and the closure of 5 public group homes for the developmentally disabled.

One cut that is likely to generate a lot of agitation is a proposal to cut $2 million from the monthly personal needs allowance for Medicaid residents of nursing homes, chronic disease hospitals and long term care facilities.  As the law now applies, all social security payments and pension payments must be turned over to pay for their care except for $69 a month so that they can buy necessary items.  The Malloy budget would change the law so that residents and patients can keep no more than $60.

Eliminating non-emergency dental services and reducing vision care services for poor adults (those who receive Medicaid) would save another $12 million

While Public Higher Education gets cut for about $70 million dollars in cuts, funding for primary and secondary education expands including $3 million more to expand enrollment at charter schools and $42 million to expand enrollment at magnet schools.

A number of changes are also made to the prison system including what appears to be the closure of another prison and an interesting $10 million reduction that the Governor’s budget describes as resulting from an “unspecified schedule change for Correction Officers and Correctional Lieutenants.”

A good detailed budget summary can be found at the Office of Fiscal Analysis – Malloy Budget Proposal.

In addition, for an alternative view of budget issues, check out a new blog by Heath Fahle at The Wonk Blog.

If you have specific questions about the budget plan, please send them along or post them in the comment section.

Challenging the “Prescribed Path” is not disloyalty

The importance of debate:  Even (no especially) in times of great strife and turmoil

Following the extension of the Bush Tax Cuts, President Obama this week released his $3.7 Trillion dollar Federal budget, a budget that lowers domestic spending to Eisenhower levels by cutting hundreds of vital programs;  basically maintains defense spending unaltered and includes a $1.7 Trillion dollar deficit.

Republicans reacted by blasting him and the Democrats as “big spenders” – despite the fact that while their proposals cut different programs had virtually the exact same bottom line.  Watch last night’s Daily Show for a funny, yet shockingly accurate assessment of the Republican’s reaction. (http://www.thedailyshow.com/#tool_tip_1)

Meanwhile, here in Connecticut Governor Malloy proposes a budget that has the deepest budgets in Connecticut history, along with an unattainable demand from Connecticut’s public employees and record tax increases.

 The response:   Republicans react by blasting him and the Democrats as big spenders – but in this case they don’t even have the willingness to put forward any ideas except to complain that more taxes are not the answer.

Meanwhile, both in Washington and here at home, the response from the Democrats has ranged from accolades for the courage to cut spending, acceptance of the inevitability that we are headed into an extended or permanent period in which we recognize “government is the enemy” or quiet desperation that the political environment gives the Democrats no other options.

There is no question that reasonable people can certainly disagree on the best course of action for the nation and state, as well as, what will or won’t work when it comes to re-energizing the economy.  However, I fundamentally reject the notion that the path laid out by President Obama or Governor Malloy is necessarily the best path and I’m even more certain that raising questions, concerns and objections is not only allowable but a healthy and necessary part of the process.

In some ways, the reaction to the concerns and objections that I and others have raised is even more surprising than the path our leaders have laid out for their respective jurisdictions.  One Courant columnist opined that Malloy must be on the right path because “liberals” like myself were unhappy with some of his proposals.  On a more micro-level, my Facebook posts on the budget have generated numerous responses that suggest we Democrats should give the new Governor our support by refraining from being critical.  Some have even suggested that my complaints and concerns are not only disloyal but serve to undermine the Governor and the good work he is doing and will lead to even further damage to the programs that we care so deeply about.

The importance of teamwork should never be denigrated and facing the reality of the situation Connecticut faces is of paramount importance, but criticism, concern,  and debate is not, in and of itself, an act of disloyalty.  In fact, I would argue that it is exactly the opposite.

Neither the President nor the Governor has cornered the market on determining what is the best course of action.  In this case, the President was wrong to support the Bush Tax Cuts and the Governor is wrong to back off the need to get Connecticut’s wealthy to pay their fair share.

In addition, some of the proposed cuts in Washington and Harford should be rejected flat out and others modified to reduce some of the negative consequences.

The time has come – in Washington and in Hartford – to face the ramifications of failed tax and spending policies.  A new age is upon us that requires a significant transformation in the way government works and what government should and should not do. 

But only through real, fact-based and sometimes difficult and uncomfortable discussion can we hope to find the best paths forward.

Pointing out where the President and the Governor are going wrong is not an act of disloyalty, but exactly the opposite.

Priority #1 – Telling the Truth – Budget Cuts Have Impacts

One more look at the new budget and higher education;

As the state of Connecticut finally steps up to deal with the financial crisis that threatens to derail it, one of the most serious challenges is to discern the difference between truth and political spin.

As we all know, all too often political spin has replaced virtually all honest dialogue about governmental issues at the Federal, state and local level. Here in Connecticut, the “political spin” began even before Governor Malloy delivered his Budget Address as the Governor and his team expertly created and maintained the mantra of “Shared Sacrifice”, along with a pledge to maintain funding for municipalities and not to destroy Connecticut’s Safety Net.

The importance of speaking honestly with the people of Connecticut about the reality of tax increases and budget cuts is perhaps nowhere more evident than when it comes to the reality facing those who attend or seek to attend one of Connecticut’s public institutions of higher education.

Despite the rhetoric, the undisputed truth is that as Connecticut state government makes cuts to its public colleges and universities, the cost of providing a high quality education is shifted more and more to students and their families.

That is not to say that our colleges should be exempt from cuts or that, like the rest of government, greater efficiency and effectiveness should not be demanded, but the truth is, it costs a lot of money to provide the type of education students need to succeed in the 21st Century.

In Connecticut, the overall level of state support has been decreasing over the past two decades.

For example, in 1991 the state provided 50 percent of the costs of running the University of Connecticut, today that percentage is below one third. As the overall budgets for UConn, Connecticut State University and the Community Colleges grew by well over 200% over the past two decades, the level of funding from state government increased by only about 80% Since funding for higher education comes from primarily two sources, the state and the students, without adequate increases in state funding, tuition and fees have been forced up in increasing amounts.

At UConn, tuition over the past two decades has gone up 284 percent, and well over 350 percent at CSU. The data are clear, the evidence is profound, the truth is that as the state makes cuts, costs are shifted to students and their families.

As a direct result of the state’s decision to remove money from UConn’s Operating Fund, tuition is already scheduled to jump 7%.

Yesterday, Governor Malloy proposed cutting Connecticut’s public colleges by about $70 million.

Malloy’s Secretary of the Office of Policy and Management, Ben Barnes said the 10 percent cut was really 2 to 3 percent cut because the schools have “significant resources beyond their general fund block grants,”

When asked about the impact, Malloy’s Commissioner of Higher Education, Mike Meotti said “We just can’t project what this is going to mean on tuition yet…But you can’t really say ‘Ahhha, this is going to lead to tuition increases.

Ben Barnes and Mike Meotti are two the smartest, most capable people in state government or, for that matter, anywhere.

The fact is, the previously approved 7% tuition increase (needed to make up for last year’s cut) will mean an increase of about $700 for every student.

Cutting $21 million more, as Governor Malloy proposes will force tuition up even further. Can reductions and efficiencies reduce UConn’s need to come up with the $21 million?

Of course, savings can and will be found, but considering the primary costs of a university are faculty and staff, as well as energy and other necessary expenditures, the vast amount of the cut will need to be made up.  That is the simple truth.  Why?  Because higher education is an expensive endeavor to provide and a variety of factors including the by-laws and contracts that Connecticut’s public institutions must legally follow make it impossible for these institutions to cut $21 million in a single year.

The Commissioner of Higher Education knows that, the Secretary of the Office and Policy Management knows that and Governor knows that.

Spin is no replacement for the facts.

To make up for this additional cut, UConn would need to raise tuition by a total of 17 percent or about $1,700 per student. Equally significant impacts will be felt at Connecticut State University and the Community Colleges. To suggest otherwise is simply not being honest about the impact budget cuts have.

And if Connecticut is to successfully deal with this financial crisis, real, direct honesty on the part of our elected officials must be the number one priority.

Its Budget Day in Connecticut! Malloy to speak at noon

The debate will rest on the definition of “shared sacrifice” and “preserving the safety net”

Since Monday, Gov. Dannel Malloy’s strategy on raising taxes has become clear. Yes to building some degree of progressivity into the state’s income tax system by creating more tax (8 instead of three)brackets and adding an Earned Income Tax Credit for low-income working families.

Connecticut’s 10,000 millionaires, who won big after President Obama’s extended President Bush’s tax cuts, will be taxed at a rate of 6.7 percent, a modest rise of about 3 percent from the former top rate of 6.5 percent of income.

The Malloy administration’s argument is that if Connecticut taxes the wealthy any more, they will sell their homes, pull their kids out of school, turn their backs on their communities and move out of state.

The Malloy budget also eliminates the all-important local property-tax credit, a big hit for middle-class families who will also be burdened with an income tax hike.

As for state employees, they are now listed as Public Enemy No. 1.  The governor calls for $2 billion in concessions (starting with $1 billion this coming year.).  As noted, Malloy’s demand is for a “give-back” that is five times the amount Governor Rell got two years ago.

The single most incredible development in the entire process is the OPM official within the Malloy administration’s who threatened that if the state employees don’t roll over and provide the $1 billion in give-backs, the “alternate route to a balanced budget” will be far deeper spending cuts that will leave the social service safety net in “tatters and core services decimated.”

Thus, if services are decimated, it’s the state employee’s fault.

Meanwhile today, Malloy will be calling for $750 million in spending cuts – the vast majority hitting higher education and social services.

While Malloy pledged during the campaign to “preserve the state’s social service safety net,” his new budget leaves Medicaid $176 million short of what is needed to maintain the current level of services and nothing new to address the growing demand for services. 

Among his proposed cuts is to phase out prescription drug subsidies for the elderly and reduce dental and vision services for the poor.

He will also be laying out an agency consolidation plan that won’t save money this coming year, but will in the future.

The new budget will also attract more federal aid by creating a new “health care provider fee” that will be charged every time one gets health care – the benefit is that the federal government will reimburse 50 percent of that tax for the poor.  (It is a rather complex way of getting additional revenue, but it has certainly worked in the past.).

Overall, the governor will be proposing a $19.74 billion budget for the coming year – an increase of 2.4 percent.

Malloy panders to the talk-show crowd:

Governor Malloy (Photo by Christine Stuart/CTNewjunkie)

 [cross-posted from Pelto’s Point at newhavenadvocate.com]

Yesterday, it was a new tax plan that comes close to coddling the rich at the expense of the middle class.

 Today, it is the announcement that Malloy will seek $2 billion in employee concessions. 

Putting aside the “let’s beat the shit out of state employees,” the Malloy proposal isn’t shared sacrifice – it is scapegoating of the worst kind. 

Malloy has put out a number that is designed to fail.

When state employees end up paying their “fair share,” when they end up paying more than their “fair share,” Malloy’s political maneuver ensures that they still end up losing in the public opinion game.

Take a look at CTMirror’s story; http://ctmirror.org/story/11515/malloy-seek-2-billion-employee-concessions-over-two-years or CtNewsjunkie’s story http://www.ctnewsjunkie.com/ctnj.php/archives/entry/unions_will_be_asked_to_sacrifice_2b/

There is no question concessions are needed — major concessions at that — but anyone in the know, including the governor, knows that $2 billion is a number designed to fail.

During the last budget cycle, the state employee unions and Gov. Rell negotiated a “deal” to save the state almost a $1 billion over three years.  Of that, almost $400 million came out of the pockets of state employees through a wage freeze, a wage cut through unpaid furlough days and higher health care costs for some employees.

Under the deal, the bulk of the savings came from deferring critical pension payments — a move that was penny wise and a pound very foolish.  It was a move that Malloy himself repeatedly called “a budget gimmick.”  In fact, he rightfully said that when he was governor he’d make all required pension payments.

So Malloy knows another round of wage freezes, even more significant furloughs and even greater health care changes amount to about $500-$600 million – not $2 billion.  The $2 billion is nothing but a fraud, one designed to humiliate and punish state employees for – well, for being state employees.

Yes there are significant savings to be had.

Yes, state employee wages and benefits can and will be far more limited in the future.

Yes, the state must address and reform the long-term obligations associated with its present pension and health benefit system, but this tactic does nothing more than attempt to position the new administration on the side of those who blame state employees for decades of bad policy making by previous governors and legislators.

One of the most interesting points the Malloy administration revealed is that its point-person with the unions is Nancy Wyman’s closest aid and advisor.  Wyman, the same person has built a career and a reputation as the voice of reason and facts while serving as a champion for those hard-working, dedicated state employees who get up every day and work hard to provide Connecticut’s citizens with the programs and services they need and deserve to live better, safer and more fulfilling lives.

This Malloy proposal is just about as far as one can get from the work Nancy Wyman has done over the past 30 years.

The Malloy anti-state employee plan is beyond belief.

Wait, What? A Tax Plan That Would Make a Republican Governor Proud?

The CTMirror has posted a copy of Malloy’s tax plan: http://ctmirror.org/sites/default/files/documents/tax%20proposal.pdf and a corresponding story http://ctmirror.org/story/11505/malloy

More analysis to come in the coming days – but if you go outside – you’ll probably hear Connecticut’s wealthy popping the champagne bottles and toasting this tax proposal.

An new income tax rate of only 6.7% for those making over a $1 million while eliminating the all important property tax credit  — which is probably the single most important tax policy for middle-income families?

I suppose the good news is that since the top income tax rate will remain so much lower than New York and New Jersey – let alone – New York City that we can rest assured that our super wealthy won’t be selling their homes, pulling their kids out of school and heading to safe havens…

While the Administration will argue that the plan builds some “progressivity” into the income tax, it is limited at best and because it removes the all important property tax credit from the income tax it is a major hit to Connecticut’s middle income taxpayers.

Even in the worst of the previous two recessions the property tax credit was never reduced below $300 – now he is proposing eliminating it – a shocking hit to every middle class homeowner.

The plan also raises the gas tax – which disproportionately hurts middle class, working families who have no choice but to use their cars to get to work and meet the challenges of daily life. It also increases the sales tax rate and taxes clothing and non-prescription drugs…

But his does not broaden the sales tax to a variety of business services such as advertising.

We’ll know more in the coming days – but as of now – the wealthy in Connecticut pay about 5% of their income in state and local taxes while the rest of us pay about 10% of our income in state and local taxes. This plan does little (if anything) to balance Connecticut’s tax burden on middle income families.

At first blush – at least – it is a plan that would make a Republican governor proud!

SustiNet – Connecticut’s Health Care Reform Law – It’s a Big Fricking Deal

[Cross-posted from Pelto’s Point – http://www.newhavenadvocate.com/peltos-point/default]

The Connecticut legislature will be holding a major public hearing today on the legislative proposal to further implement Connecticut’s landmark healthcare reform program called SustiNet.

SustiNet was adopted in 2009 by the Connecticut General Assembly. The law put in place a process to ensure that Connecticut was ready to implement the Federal healthcare reforms that were making their way through Congress. With a major implementation plan developed, phase I of the law is now complete and it is now up to the legislature to authorize or reject moving forward with the full plan.

Healthcare reform has become the issue of our time, both in Washington and here in Connecticut. In our politically polarized country few if any issues generate as much rhetoric and political debate. As observers across the political spectrum have come to know, it is the duty of Republicans, conservatives and tea-baggers to refer to national health care reform as Obamacare and socialism. Meanwhile, Democrats, liberals and those on the left are quick to point out that opponents of healthcare reform refuse to recognize that Americans have a fundamental right to health care and that like Scrooge, these right- wing nuts will not satisfied until the so called surplus population (aka the poor and uninsured) are dying in the streets.

Interestingly, both sides have managed to put God and country on their side while openly suggesting that the other side is following in the footsteps of Hitler and the Nazis. Meanwhile, the laws that require hospitals to treat anyone who walks in the door remain intact and virtually all economists recognize America’s existing healthcare system is bankrupting the country, our economy and countless hard-working Americans.

So with that as a backdrop, Connecticut s state government will spend a good deal of time and energy in the coming months debating whether to move forward with the SustiNet, a law that is designed to make sure that Connecticut is at the forefront of the effort to create a higher quality, more affordable healthcare system that will also provide healthcare coverage to the state’s uninsured residents.

One of the most important elements of the SustiNet law was the requirement that, regardless of what eventually happens with the Federal reform effort, insurers in Connecticut will be prohibited from discriminating against people with preexisting conditions. In addition, the SustiNet law includes a series of steps to improve quality while slowing the increasing costs of healthcare in Connecticut.

By bringing together state employees and retirees as well as state funded Medicaid and HUSKY beneficiaries, the law begins by using the state’s buying power to force health insurers to enhance coverage while charging more reasonable premiums.

Second, this new SustiNet health coverage option will give Connecticut cities and towns the opportunity to buy into what will be better, more affordable health insurance policies thereby reducing the pressure on local property taxes.

Third, SustiNet will then offer commercial-style insurance to small employers and non-profits, allowing employers and non-profit organizations to provide their employees with more, and hopefully less expensive, healthcare coverage.

When fully implemented, municipalities, employers and consumers will all be able to buy into the larger, more efficient SustiNet health insurance pool if they determine that is their best course of action for getting high quality, affordable coverage.

The SustiNet system will also maximize the amount of federal funds Connecticut receives. By getting its full share of federal funds, these enhancements and improvements will be much more affordable.

Further, the SustiNet law raises the required level of patient care including state-of-the-art programs like patient-centered medical homes, emphasis on preventative care and evidence-based medicine. It also creates fairer, more accurate reimbursement methods and encourages investment in technology such as electronic medical records that reduce medical errors and duplication of services.

Finally, rather than leave the development and management of this program in the hands of various state departments and agencies, the law seeks to improve coordination and oversight through a quasi-public SustiNet Authority.

Are there major costs associated with implementing this piece of legislation – yes of course – but there are even greater costs by not implementing it.  People who need care and don’t get it end up seeking treatment in far more expensive places like emergency rooms.  Meanwhile without affordable health insurance more and more companies will find themselves unable to maintain their present work force let alone expand it.  And cities, town and nonprofit companies all need to find ways to provide quality benefits at more affordable rates.

Opponents miss the key point – SustiNet is a piece of legislation that will lead to a better Connecticut – economically and healthwise.

(The full implementation recommendations of the SustiNet Board can be found at: www.ct.gov/SustiNet)

For an excellent opposing view on this story, check out Heath Fahle’s new blog  http://www.heathwfahle.com/blog/.

The real definition of entitlement: “The belief that one is deserving of or entitled to certain privileges”

Mark Bertolini, CEO Aetna

(Cross-posted from Pelto’s Point at www.newhavenadvocate.com)

Of course, when it comes to the term entitlement many Americans think of government entitlement programs like Medicare or Medicaid. Entitlements are those government services or benefits that people receive when they meet the necessary legal criteria in order to receive such services or benefits.

However, here in Connecticut (in the year 2011), the notion of entitlement seems to be taking on a new and far more ominous meaning.

First Robert Burton wanted his $3 million dollars back from UConn and his name removed from the $48 million dollar Burton Family Football Training Complex because he was left out of the loop on the selection of a new football coach.

Now, Mark Bertolini, the CEO of Aetna announces at a recent Middlesex Chamber of Commerce meeting that whether his company will add or eliminate jobs in Connecticut will depend in part on how the state resolves its budget crisis.

See the Hartford Courant story – http://www.courant.com/business/hc-aetna-bertolini-0212-20110211,0,659887.story

Bertolini reports that “we’ve done the analysis, and, quite frankly, Connecticut falls very, very low on the list as an environment to locate employees . . . in large part because of the tax structure, the cost of living, which is now approaching, all in, the cost of locating an employee in New York City,”

That is quite a threat from Aetna – A Connecticut creation that has called our state home for 158 years.

This comes from the CEO of Aetna, whose 2010 operating earnings were $1.6 billion, up 43% from 2009.

Aetna – a major multinational corporation that proudly declares that it does business in 160 countries around the world.

Aetna – whose 2010 pre-tax operating margin was up to 8% and their post-tax margin as up to 5.2% – an increase of 1.5%.

Aetna – whose stock closed yesterday at 37.65, up from about 29 a year ago.

This past year, Mark Bertolini’s Annual Cash Compensation was $1.5 million, plus short term compensation of $932 thousand plus long term compensation of $7.2 million.  His total 2010 compensation package was worth $12.6 million

Although Bertolini fails to make clear what his specific demands are we can safely assume that his worry relates to increased taxes for his company or himself.  Does he mean that ANY TAX INCREASE will send his company fleeing?  (Has he taken into consideration the huge windfall that he and his executive team received thanks to the extension of the Bush Tax Cuts)?

Is Bertolini saying he’ll lay off his 7,000 experienced workers if Connecticut raises taxes?

Is he saying he’ll sell the company’s huge property holdings here in Connecticut?

Is he saying that he and his senior management team will pull their kids out of school, sell their homes and move out of state because Connecticut tries to balance its budget by asking those among us who can pay a bit more to pay their fair share and help ensure Connecticut remains a great place to live and raise a family.

There is something truly shocking about the arrogance that flows from comments like his.

As we face the greatest economic challenge since the Great Depression, it is amazing that this “corporate leader” uses his prestige and privilege to tell us that as our elected officials finally work to put Connecticut back on track, their actions might very well lead Aetna to turn its back on its own state..

It is comments like Bertolini’s that make me worry about the very future of our Nation.

Shared Sacrifice? What about the unshared sacrifice to date?

UConn Storrs (photo by uconnruf)

Are Connecticut’s public colleges and universities in the cross-hairs again?

Yeah…yeah… we’ve heard all it all before…“A well educated workforce is the key to economic growth and prosperity” and “The percentage of college educated workers is one of the single most important factors to a state’s economic health.”

However, when it comes to adequate state support for our public colleges and universities, Connecticut has a long and sad record of failure.

Twenty years ago, when we already ranked at the bottom of the nation, about half of UConn’s budget came from state funds.

This year, the state of Connecticut will cover less than a third of the University’s total operating expenses.

A similar story holds true at Connecticut State University and Connecticut’s Community and Technical College System.

Without enough state funds to fulfill their missions, Connecticut’s public institutions of higher education have been forced to become increasingly reliant on students and their parents to pick up the costs associated with running high quality educational programs.

Whether at UConn, CSU or the Community/Technical Colleges, tuition and fees are now paying for the lion’s share of the total operating cost.

Adding to the problem, at UConn, not only have there been record tuition increases but the University has dramatically increased the number of students as a way to raise additional revenue. Their rationale is simple – more students mean more tuition and fees, even if the end result is larger class sizes, fewer course offerings and the need to take more than 4 years to complete a basic bachelor’s degree.

Since the UConn 2000 infrastructure program began in 1995, the number of students at UConn has jumped from 14,500 to 21,500.  However, in a stunning tribute to the notion of “pay more, get less”, while the number of students has increased by 48 percent, the number of full-time faculty is up barely 15%.

As Governor Rell and the Legislature grappled for ways to “balance” this year’s budget without having to deal with any political ramifications they did something that had never, ever been done before.  Rather than “cut” the budget for Connecticut’s public institutions of higher education, they actually reached into the school’s internal operating fund and transferred more than $30 million in student tuition and fees over to the state’s General Fund.

Not only did the gimmick mean students and parents paid more in tuition only to see the money go to the state’s non-higher education costs but this maneuver amounted to the deepest percentage cuts to Connecticut’s public colleges in state history.

In recent weeks, the Malloy Administration has made it clear that they will be calling for shared sacrifice as they look for record budget cuts.  The problem is that that Connecticut families seeking a college degree have already sacrificed far more than their fair share.

Further complicating the notion of shared sacrifice is that fact that the new Administration and the Legislature fully understands that there are significant areas of the state budget where cuts are simply not possible – either because there is a consensus that the services are just to vital to cut or there isn’t the political will to make those cuts. 

For example, State government can’t cut its debt services payments; we’ve already learned the disaster associated with failing to make pension payments; Malloy has promised not to cut local education funding and every dollar cut from Medicaid (health programs) means an immediate loss of 50 cent in federal reimbursement.

So the notion of across the board cuts is absurd.

Certain areas will be cut deeper than others and Connecticut’s history is to cut our public colleges and universities knowing that if the schools really need the funds they can get them by increasing tuition.

While the Malloy Administration would not be alone in targeting cuts to higher education, California’s new governor has proposed nearly $2 billion in cuts to their colleges, it is important to note that not all states are undermining the work of their universities.

Gov. Robert M. McDonnell, Virginia’s Republican Governor recently proposed adding $50 million to their higher education budget.  It would be part his longer term plan to create a more educated workforce

Meanwhile, Sam Brownback, the new ultra-conservative Republican governor of Kansas has actually proposed a three-year, $105-million plan to enhance their university programs that educate students for high-paying jobs in areas such as aviation, cancer research, and engineering.

And not to be outdone, this year, North Carolina actually increased their higher education budget this year by 6%.

Of the 50 states, the average percentage of the state budget devoted to public higher education is 9%. 

Virginia already devotes 14% of its state budget to its public colleges, North Carolina 16% and Minnesota 23%. 

Connecticut is at 7.3% and dropping.

Cutting our colleges is bad for our economy, bad for middle class families and bad for our society.

Next Wednesday, budget day, will tell us a lot about what “shared sacrifice” really means

Just Freeze Spending – How Hard Can That Be?

 [This post was originally posted to Pelto’s Point – my blog at the New Haven Advocate] 

A common refrain we all hearing these days across Connecticut is that the state has a “spending problem – not a tax problem” and the solution is simply to freeze or cut spending.

Connecticut has a “spending problem” makes excellent rhetoric.

The governor and legislature could simply step up, make the cuts and Connecticut would be back on track.

Not to duck the issue, for there is no doubt that Connecticut’s state government can be far more effective and efficient with its scarce resources. However, having worked with Connecticut’s budget for nearly three decades AS A WHAT?, I can say significant cuts can only be achieved by significantly reducing or eliminating actual programs which, in turn, will mean some vital services disappear, local property taxes skyrocket and many more families face the desperation associated with job loss and economic distress.

To date, there has not been a single responsible proposal that has laid out how to cut $500 million or more from Connecticut’s state budget.

So it was particularly noteworthy when Gov. Malloy announced that he’ll be cutting $2 billion from Connecticut’s current service budget before he looks at increasing revenue.

To put the debate into perspective, Connecticut’s current service budget (that is doing next year exactly what we are doing this year – including inflation) would require almost $4 billion in additional revenue.

Malloy seems to be suggesting that his plan is to simply split this problem in half – cutting about $2 billion in spending and finding about $2 billion in additional revenues.

Malloy’s suggestion goes well beyond “freezing” spending – he is implying that he will be proposing record breaking cuts in Connecticut’s budget.

The underlying issue is that Connecticut’s $19 billion dollar budget is very labor- and service-intensive and there are some significant portions of the budget will be going to go up – no matter what.

Because some expenses will have to be increased (like debt service and pension payments), this debate is not about “freezing programs in place” but identifying areas of the budget where cuts can be so deep so as to allow for the growth that must take place in the areas that can’t be cut.

Before cuts can be made, there must be an understanding about those programs or items that will be pushing up next year’s budget. Those items include:

Increased debt service (must be added): $248 million

Wage increases (would require union approval to eliminate): $160 million

Fringe benefits (including pension payments): $525 million  (There is a limited ability to reduce this increase. Pension payments must be made this year, since they were deferred in each of the last two years. Health care changes for existing retirees can’t be made, while changes for existing employees would require union approval).

27th payroll (Occurs every 11th year due to 2 week pay schedule): $119 million

 Increased Medicaid (due to increased usage/50% reimbursed from Feds): $359 million

Statutory increases in formula grants to towns: $145 million

Other statewide costs: $185 million

All other changes: $127 million

  • Total increase needed to meet current services requirements: $1.87 million

Realistically, an agreement with the state employee unions that includes no wage increases, a number of furlough days and greater health care concessions could save the state about $250 million in new spending.

Such an agreement would reduce the growth in next year’s budget from about $1.87 million to about $1.62 million.

The state could simply decide not to give the towns more money which would save another $145 million (although that action will certainly lead to higher local property taxes).

Finally, even if the state hacked away all the other basic inflationary costs – which in essence means cutting agencies existing programs – the total amount of additional spending next year will be over well over $1.2 billion dollars.

So when Governor Malloy says he wants to cut $2 billion from the budget – he is not saying he plans to “freeze spending” he is talking about proposing massive and historic cuts to programs and services.

And by next week at this time, we’ll know exactly which programs and services he is targeting.