Fake State Budget “Surplus“ goes from $680 million to $34 million in a blink of an eye…

(Cross-posted from Pelto’s Point at the New Haven Advocate)

Back on one of my favorite issues….

Over the past few months most of Connecticut’s elected officials (and many in the media) have celebrated Connecticut’s growing state surplus.

Republicans, in turn, were blasting the Democrats for raising taxes when the state had a surplus and Democratic legislators have been talking about using the extra funds to reduce the extent of the budget cuts.

Intentionally (or unintentionally) what all of these people failed to reveal was the this year’s budget (FY11) was “balanced” with a plan to borrow $956 million. A loan that was scheduled to be paid off by maintaining a surcharge on electricity bills.

But interestingly, even though the budget was approved last summer, and that officials often worry about the State’s cash flow, the State Treasurer never borrowed the money to pay for this year’s budget.

One might think that it fact would mean that it would be reported that without that borrowing the state was actually facing an almost $1 billion dollar deficit, but since the budget authorized the borrowing, it was always reported that the budget was “balanced” and any new revenue was reported as a growing “surplus”.

Now Governor Malloy is proposing to NOT borrow the money to balance this year’s budget and instead he wants to use this year’s “surplus” to pay this year’s expenses.  The move saves the cost of borrowing and saves the far more significant cost of the interest on that loan.  It could even mean the surcharge on electric bills could be reduced.

All of this would be great news except that Governor Malloy’s plan uses up all but about $34 million of the recently reported $680 million state budget surplus and this places a significant limitation on how the State is going to deal with the $300 million dollar deficit in the budget that the Democrats approved and the Governor signed into law a couple of weeks ago.

$300 million dollar deficit in the new budget?

Remember that Governor Malloy had assured legislators that his state employee concession plan would save an unachievable $1 billion
dollars. Senate President Don Williams and other leaders said they too were sure the agreement would save the billion dollars so Democrats, in turn, adopted a budget that included the full billion in concession savings.

When the Malloy/SEBAC agreement was later announced it turned out that it “saved” $1.6 billion over two years and only $700 million in the first year. (not to mention the fact that some of the $1.6 billion in savings is a tag unlikely).

The agreement, therefore, left at least a $300 million dollar deficit in the state budget for next year.

Malloy has talked about closing that gap with a combination of additional budget cuts and using some of the “revenue growth”.

However, with the surplus gone, we can rest assured he will focus on additional budget cuts and as of now it isn’t even clear the legislature will have the opportunity or take the initiative to vote on where those cuts will be made.

Not good news considering $300 million in additional cuts would require about 50% more cuts than has already been made to next year’s budget.

A state surplus of $680 million disappears in a day?

This must be Connecticut.

Malloy Ramps Up His Psychological War on State Employees

REVISED AND UPDATED  (cross-posted from Pelto’s Point at the New Haven Advocate)

The ugly truth facing Connecticut became increasingly apparent Wednesday as Governor Malloy signed into law a new state budget that is $2 billion out of balance.

A budget that from the very beginning was designed to fail while making Connecticut’s public employees the scapegoats for the state’s fiscal problems.

Over the last 48 hours, relying on unachievable concessions from Connecticut’s state employees, Democratic Legislators approved Governor Malloy’s plan that will eventually lead to massive cuts to vital services.

Rather than confront that truth and raise sufficient revenue or identify and approve additional cuts the Democratic majority held fast to the lie that $2 billion in concessions could be achieved.

However, with only 45,000 active state employees, a legal impediment to reducing the benefits provided to retirees and a legacy of underfunding Connecticut’s state employee pension and health care costs it is literally impossible to achieve a $2 billion concessions package that would survive the negotiation and approval process.

Now, with the budget approved, this twisted approach to governing moves forward as the Governor announces that tomorrow he will issue 4,000 lay-off notices and that “everything is on the table” for additional cuts.

The magnitude of the budget lie is becoming apparent.

4,000 Connecticut state employees and their families now wait in fear for the news that their lives will be plunged into chaos as they are thrown into the world of unemployment during the greatest economic downturn of the past 50 years.

Adding insult to injury, laying off 4,000 employees will not only impact the quality and availability of important state services but it will only “save” the state about $300 million leaving a hole of at least $700 million in the coming year’s budget.

According to the Governor’s rhetoric, this “deficit” will only be eliminated through additional cuts rather than additional revenues – despite the fact that the new budget gave Connecticut’s super wealthy a pass on being required to pay their fair share in taxes.

Cutting $700 million more on top of the record cuts that have already been adopted will have a profound and devastating impact on Connecticut’s most essential services.  The quality of life for tens of thousands, including some of Connecticut’s most vulnerable citizens is now at risk because legislators would not face the reality that they were voting on a fraudulent budget plan.

Meanwhile, like so many politicians around the country, Governor Malloy continues to blame this impending disaster on public employees as he ramps up a game of psychological warfare to force concessions and set the stage for cuts in services that can then be blamed on the state’s workers.

And as this horrible strategy plays out there is nothing but silence from Connecticut’s Democratic officeholders.

Imagine if Pratt & Whitney announced 4,000 layoffs.

No, better yet, think back to the times that Pratt has announced layoffs of far fewer employees.  Rallies with Democratic politicians on the picket line calling for investigations, demanding meetings and charging that the company is engaged in union busting.

But now when the shoe is on the other foot and a Democratic CEO who is unfairly targeting employees….Silence.

Hypocrites!

Connecticut’s new state budget – A commentary on our times

(cross-posted from Pelto’s Point at the New Haven Advocate)

As Democratic legislators circle the wagons to vote for Connecticut’s proposed budget, not one of them admits that while the Republican’s alternatives are wrong, this budget could have – and should have – been better.

This “Democratic Budget” unfairly targets state employees, fails to force the super wealthy to pay their fair share and makes record cuts to our colleges and universities.

After reading the coverage of the debate in the State Senate last night you’d think this budget was a “victory” and it is not.

The most telling statement of all comes in the form of the press release put out by the Senate Democratic leadership who validate and celebrate their
budget vote by pointing out;

“No wonder the budget framework has been endorsed by business leaders from across the state, including the Fairfield County Business Council, Bridgeport Business Council, and the CEO’s of some of Greater Hartford largest companies, such as Aetna, UTC, and CIGNA,” said Senator Williams and Looney.

Has it come to that?   The proof that something is good public policy is because America’s biggest CEOs say it is…

A final note.  The Democrats seem particularly proud that they are not only maintaining but actually expanding municipal aid as a way to support local services and keep local property taxes under control.  What they fail to point out is that since the additional funds are based on the expanded
real estate conveyance tax this budget will give the wealthy town of Greenwich $12.5 million dollars more while Manchester, a struggling city of comparable size, will receive about $1.5 million more —- 10% of what Greenwich will get.

A budget that coddles those making more than $2 million dollars a year while placing an even greater burden on the middle class and increases
municipal funds for Greenwich over Manchester at a rate approaching 10-1 is not a good and fair budget.

Even if the CEOs of America’s biggest companies say it is.