(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.