Gubernatorial Election 2014, Malloy, State Budget, State Deficit, Taxes Gubernatorial Election 2014, Malloy, State Budget, State Deficit, Taxes
The truth is that Connecticut is facing a projected state budget deficit of at least $1.3 billion dollars for the fiscal year that begins after this year’s gubernatorial election.
But today Governor Dannel “Dan” Malloy boldly announced… “We don’t face a deficit.”
In a late afternoon CT Newsjunkie story entitled, Malloy Dismisses Deficit Projections, Won’t Ask for More Concessions, the Governor not only explained that the deficit was going to disappear but he took the opportunity to repeat his iron-clad pledge that he will not propose or accept any new taxes in a second term.
As Malloy explained, “There will not be a tax increase.”
And to top things off, Malloy said that he was ruling out asking state workers for more concessions should he be re-elected as Connecticut’s Chief Executive Officer.
While the Governor’s hyperbole is impressive, there is not a state employee, retirees, public school teacher or retired teacher, let alone a public official or taxpayer who believes that Malloy’s portrayal of reality is accurate.
Hearing about Malloy’s remarks, one can’t help but dwell on that classic idiom about pigs flying or the one about Hell freezing over.
Or for that matter that one we used as kids that always got a good laugh and referred to the possibility of monkeys flying out our butts.
For the latest on Malloy’s economic theories check out the CT Newsjunkie story at: http://www.ctnewsjunkie.com/archives/entry/malloy_dismisses_deficit_projections_wont_ask_for_more_concessions/ and the Hartford Courant story at: http://courantblogs.com/capitol-watch/malloy-promises-no-new-deficit-rejects-new-state-worker-givebacks/
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While most Connecticut residents feel a growing unease about the Malloy administration’s irresponsible and underhanded approach to state budgeting, I’m often asked to give specific examples of how Governor Dannel “Dan” Malloy has handled the Connecticut budget during his term in office.
Long-time readers may remember this one, but here is a prime example for readers who are newer to Wait, What?
In January 2010 there was a tragic school bus accident on Route 84 in Hartford that killed a young Rocky Hill student who was attending one of the CREC magnet schools.
As politicians are wont to do, state legislators kicked into action, and on May 1, 2010 the Connecticut General Assembly passed Public Act 10-83. The new law created a special protected trust account called the Connecticut School Bus Seat Belt Account and required the Department of Motor Vehicles to administer a program to use the funds to help Connecticut school districts pay for the cost of equipping school buses with lap/shoulder (3-point) seat belts.
To pay for the program, the legislature increased the cost associated with restoring a suspended driver’s license from $125 to $ 175 and directed that $50 of each license restoration payment be deposited into the Connecticut School Bus Seat Belt Account. The Office of Fiscal Analysis estimated the higher fee would raise about $2.1 million a year.
Now fast forward two and a half years…
Governor Malloy had been in office for two years and none of the $4.7 million collected for school seat belts had been spent.
And then, rather than using the money for its intended purpose…
We witnessed the following;
As part of the December 2012 “deficit mitigation bill” Governor Malloy and the legislature included language that overrode the existing law and quietly transferred $4,700,000 from the School Bus Seat Belt Account into the General Fund to help eliminate the projected FY 2013 $415 million deficit.
Gone was the money for school seat belts.
That tragedy was yesterday’s news and no one even spoke out against the inappropriate raid on the School Bus Seat Belt Account.
Just a year later, adding insult to injury, Governor Malloy and his administration were crowing about a projected FY 2014 budget surplus.
But instead of using a portion of that surplus to pay back the $4.7 million taken from the School Bus Seat Belt Account, Malloy used the surplus funds to pad this year’s budget and even promised a series of election-year tax rebates and tax cuts before the fiscal reality facing Connecticut set in and he had to “postpone” those tax cut promises.
The fact is that over and over again, Governor Malloy has claimed that the state and its state budget have benefited from his good management skills.
But if a governor was truly dedicated to good management he or she would never have raided the School Bus Seat Belt Account or, at the very least, would have returned the money when it was clear that the state had the resources to do so.
Oh, and as an aside, when you hear the Republicans claim that they are the party of “fiscal responsibility,” remember that Malloy’s Deficit Reduction Plan passed the State Senate 31-3 and passed the State House of Representatives 140-3.
It was Democrats and Republicans, working together, who stole the money from the School Bus Seat Belt Account and then refused to pay it back when they had the chance.
Out here in the real world, when we talk about the need for leaders who are truly committed to fiscal responsibility, it has become painfully clear that we will have go outside the “incumbency” party to find them.
Gubernatorial Election 2014, Malloy, State Budget, State Debt, State Deficit, Taxes Malloy, State Budget, State Debt, State Deficit, Taxes
As a result of Governor Malloy’s gimmick ridden state budget, the candidate who wins the 2014 gubernatorial election will take office facing a projected state budget deficit of $1.3 billion or more.
By using one-time revenues for on-going expenses, purposefully under-funding various government programs and utilizing a series of budget gimmicks, the new 2014-2015 state budget is just about as irresponsible as they come.
The moment Malloy signs it into law he will be creating a budget deficit for this year and a catastrophe in the budget that will follow.
But as irresponsible as Malloy’s latest budget is, nothing compares to the damage that will come with his recent “NO TAX” pledge should he be elected to a second term. Malloy sealed his fate when he recently told reporters that he would, “neither seek nor accept any further tax increases” in a second term.
Pandering to phantom voters, Malloy has engaged in a George Bush “read my lips” moment.
By making an “ironclad” NO TAX increase pledge, Malloy joins the Republican candidates in assuring that the people of Connecticut must live with a tax system that crushes the middle class while coddling the rich.
As Malloy knows, Connecticut’s middle income families pay about 10 percent of their income in state and local taxes, the poor pay about 12 percent and the rich pay about 6 percent of their income in state and local taxes.
Instead of pledging to be fiscally responsible or even pledging not to increase taxes on middle-income families, Malloy has made it clear that he will continue to protect the rich, even if it comes at everyone else’s expense.
Perhaps the Governor wants Connecticut taxpayers to forget that his 2011 $1.5 billion tax increase raised the income tax rate for middle-income families while those making more than $1 million saw no increase in their income tax rate at all.
Malloy’s pledge will to protect Connecticut’s wealthy will have devastating consequences should he win in November.
The harsh reality is that as result of Governor Malloy’s failure to properly fund public education, the one thing we know about a NO TAX pledge at the state level is that it will lead to higher local property taxes and that will create a tax structure that is even more regressive.
Malloy’s irresponsible promise on taxes not only means Connecticut’s wealthy will get richer while failing to pay their fair share, but it will force our state government to further abdicate its responsibilities.
Even the most rosy revenue estimates or dreams of a renewed economy will not provide the revenue necessary to maintain vital state services during a 2nd Malloy term.
As noted, four more years of inadequate state funding for education will mean higher property taxes and reduced resources to provide Connecticut’s children with the knowledge and skills needed to succeed.
Four more years of inadequate funding for Connecticut public colleges and universities will shift even more of the costs on to students and parents and will prevent many from even getting the college education they need to lead fuller lives, be self-sufficient and help build our economy.
Four more years of inadequate funding will undermine Connecticut health and human service programs, pushing some of the state’s hospital out of business and leaving many Connecticut citizens without the vital services they need.
Four more years of inadequate funding will devastate state agencies that are already understaffed and will, yet again, unfairly target state employees.
And perhaps most importantly, four more years of inadequate funding will prevent the state of Connecticut from confronting and reducing the overwhelming debt that Malloy and previous governors have built up – that being a maxed out state credit card, insufficient funding of the state and teacher pension funds and insufficient reserves to pay for the state health care retiree accounts.
While many in Connecticut were already questioning Dannel Malloy’s priorities and legacy, his “no tax” pledge ensures that his place in history will be that of just another politician who put his own political aspirations ahead off what was best for the state of Connecticut and its citizens.
Connecticut General Assembly, Gubernatorial Election 2014, Malloy, State Budget, State Deficit Connecticut General Asembly, Gubernatorial Election 2014, Malloy, State Budget, State Deficit
When Dan Malloy was running for governor in 2010 he wrote,
We have to be committed to getting our fiscal house in order…the current budgeting is a perfect example of irresponsible budgeting…Why? Because this administration, once again, took the easy way out…the current budget was balanced on phantom cuts and one-time revenues that will not be available for the next budget round…As a result, the people of Connecticut have been sold a lemon.”
Yesterday, May 3, 2014 the Governor, with support from of the Democrats in the General Assembly adopted in irresponsible budget that relies on “phantom cuts and one-time revenues that will not be around for the next budget round.”
Connecticut’s new budget leaves taxpayers with a $1.3 billion dollar deficit for the state budget following this fall’s gubernatorial election.
As the media wrote,
Legislature adopts new CT budget built on risky assumptions (CT Mirror)
Lawmakers Approve Budget That Increases Spending, Gambles On Future Revenue (CT New junkie)
CT Mirror wrote,
The General Assembly adopted a $19 billion budget early Sunday that relies on about $200 million in fund sweeps and risky savings and revenues assumptions to stay in balance – including the last-minute discovery of $75 million in “miscellaneous” tax receipts.
They noted that nonpartisan fiscal analysts are projecting a $1.33 billion deficit in the first state budget after the election, a gap of nearly 8 percent.
And as for the promised tax break for retired teachers, CT News junkie notes,
The budget scales back the tax relief Malloy planned to offer retired teachers by phasing it in over a period of three years. Under the budget adopted Saturday, 10 percent of the retirement income would be exempt. That exemption increases to 25 percent in 2016 and 50 percent in 2017.
And to balance the new budget, the Governor and General Assembly utilized two particularly extraordinary gimmicks.
- A new $75 million in revenue that will appear from various miscellaneous taxes
- And a decision not to pay $51 million into the state employee health care fund to cover the impending retirement of correctional officers.
Last fall and again this spring, State Comptroller Kevin Lembo informed Governor Malloy and his budget office that an additional $51 million would be needed to cover the health benefits of correctional officers that would soon be retiring. Malloy failed to put the money in this proposed budget. The General Assembly’s Appropriations Committee initially proposed using one-time revenues to cover the costs but those funds disappeared in the final version of the budget that was approved yesterday. Instead of making the payment, legislative leadership is relying on what they claim is a, “level of comfort that the Office of Policy and Management will be able to meet their obligations to retiree health care.”
At this point, it is also unclear how or if the new budget actually solves the under-funding of Connecticut’s magnet schools.
The bottom line – One more fiscally irresponsible state budget for the Governor who ran on the platform of “responsible budgeting.”
Ben Barnes (OPM Secretary), Gubernatorial Election 2014, Malloy, State Budget, State Deficit Ben Barnes, Gubernatorial Election 2014, Malloy, State Budget, State Deficit
As the CT Mirror is reporting, Governor Malloy’s extraordinary budget gimmicks and Connecticut’s lagging economy have caught up with the politician’s wild re-election promises.
The CT Mirror’s Keith Phaneuf reports,
“Citing declining state revenue projections, Gov. Dannel P. Malloy gave up Monday on two of his biggest re-election year budget initiatives: a $55-per-person rebate and a supplemental payment into the state employees’ pension fund.
“We do not anticipate enough revenue to provide a tax refund or to make a supplemental pension payment, as we had hoped in January,” Benjamin Barnes, who oversees the budget as secretary of policy and management, wrote in a letter sent Monday morning to legislators.
While the Governor and his budget chief sort of skipped over the ugly details, the underlying problem is that Malloy’s rosy economic forecasts failed to materialize.
Last week the General Assembly’s Office of Fiscal Analysis reported that Connecticut Income Tax revenues were going to be $330 million short of what has been predicted.
This shortfall in revenue not only opens a huge problem for Malloy’s budget proposal for the fiscal year starting on July 1, 2014 but increases the projected budget shortfall for the following year’s budget to over $1.2 billion dollars.
Malloy, who has pledged not to increase taxes if re-elected is nowlooking at budget deficits of over $1 billion for each of the next four years if he is re-elected.
Claiming that he was sitting on a $500 million surplus this year and even more money next year, Malloy promised a series of election year tax-cuts including a $55 rebate to all individuals earning less than $200,000, and a $110 rebate to all couples earning less than $400,000.
Malloy also promised that he would pay an additional $100 million into the state employees’ pension fund, a fund that is approximately $11 billion underfunded.
But as the CT Mirror explains, income tax revenue has not come in as projected and the excessive use of one-time revenue and borrowing for ongoing expenses means Connecticut will continue to face extremely serious fiscal problems over the next few years.
You can read the entire CT Mirror story here: http://ctmirror.org/malloy-gives-up-on-tax-rebate-citing-declining-revenues/
The CT Newsjunkie’s article on this breaking story can be found here: http://www.ctnewsjunkie.com/archives/entry/malloy_scraps_55_rebate/, while the Courant’s article is here: http://www.courant.com/news/politics/hc-malloy-tax-rebates-20140428,0,4875051.story.
General Assembly, Gubernatorial Election 2014, Malloy, State Budget, State Deficit, State Surplus General Assembly, Malloy, State Budget, State Deficit, State Surplus
According to Governor Malloy and his administration, the State of Connecticut is on target to end this Fiscal Year (FY14) with a $506.1 million surplus.
Malloy administration officials are so excited about the notion of a budget surplus that they are talking about proposing a targeted election year tax cut to win over middle-class voters even though the state faces a projected $3.2 billion combined deficit over the three fiscal years following this year’s election.
Governor Malloy would have the public believe that this year’s developing surplus is a result of his good management of Connecticut’s state budget.
However, the way Governor Malloy and the Connecticut General Assembly played with State Account 35416 is a prime example of the type of budget gimmicks that were used to help create this year’s projected “surplus.”
Here is how it played out:
Just a month after the 2012 general election, the Governor called the outgoing members of the Connecticut General Assembly into a special session to address a projected budget deficit in the Fiscal Year 2013 State Budget.
With the passage of “AN ACT CONCERNING DEFICIT MITIGATION FOR THE FISCAL YEAR ENDING JUNE 30, 2013,” the General Assembly passed Malloy’s Deficit Reduction Plan. The bill passed the State Senate 31-3 and passed the State House of Representatives 140-3. Democrats and Republicans joined together to overwhelming pass the bill.
As part of Malloy’s lengthy bill was the following language;
“Notwithstanding the provisions of section 14-50b of the general statutes, the sum of $ 4,700,000 shall be transferred from the school bus seat belt account established in said section 14-50b and credited to the resources of the General Fund for the fiscal year ending June 30, 2013.”
The money shifted $4.7 million from the School Bus Seat Belt Account to the General Fund. (More on this fund in a moment).
As result of the deficit mitigation bill and some improved revenue, Fiscal Year 13 didn’t end with a deficit, it ended with a $398.79 million surplus. Of that amount nearly $200 million was “re-defined” as “future revenue” and shows up in this year’s budget…helping to ensure a budget surplus.
Even though Fiscal Year 2013 ended with a surplus, the $4.7 million was never returned to the School Bus Seat Belt Account (#35416). As of now, that fund has only about $1 million in it.
So what is the School Bus Seat Belt Account (#35416)?
Long time Wait, What? readers may remember a post when Malloy’s deficit mitigation bill passed in December 2012. It was entitled, “Remember when school bus seatbelts were a big priority?”
The December 20, 2012 Wait, What? post read something like this:
Remember when school bus seatbelts were a big priority?
Aka: No that was then, this is now…
Following the January 2010 tragic school bus accident on Route 84 in Hartford that killed a Rocky Hill student who was attending one of the CREC magnet schools, the legislature kicked into action.
On May 1 of that year the General Assembly passed what was to become Public Act 10-83.
The law created the Connecticut School Bus Seat Belt account, “a separate non-lapsing account in the General Fund” and required that the funds be used to help school districts pay for the cost of equipping school buses with lap/shoulder (3-point) seat belts.
To pay for the program, the Legislature increased the cost associated with restoring a suspended driver’s license from $125 to $ 175. The Office of Fiscal Analysis estimated the higher fee would raise about $2.1 million a year.
Fast forward two and a half years…and the fund now contains $4.7 million.
Yesterday, as part of the deficit mitigation bill, the Governor and General Assembly passed language overriding the previous law and transferring the $4,700,000 from the School Bus Seat Belt account into the General Fund…
Gone is the money for school seat belts.
That tragedy was yesterday’s news.
And besides, who would remember that the account in question grew out of the concern that elected officials had for the safety of our children.
The tale of how the government raided the fund that was supposed to be used to install seat belts on school buses is a sad and shocking reminder that while it may be true that state of Connecticut presently “enjoys” a surplus, things are not always what they seem.
Gubernatorial Election 2014, Malloy, State Budget, State Deficit, State Surplus Gubernatorial Election 2014, Malloy, State Budget, State Deficit, State Surplus
According to Governor Malloy, Connecticut’s fiscal house is in order and thanks to “surging” revenue the state of Connecticut will have a significant budget surplus this year and a balanced state budget going into the 2014 gubernatorial campaign. The Malloy administration is so excited about the news that it rumored to be contemplating an election year tax cut to try to bolster the Governor’s poor rating in the polls.
At the same time, Connecticut will be facing a combined deficit of approximately $3.2 billion in the three fiscal years following the November 2014 election.
So what is the real story about Connecticut’s fiscal health?
For those interested in the details, three recent articles provide a good explanation.
Read Keith Phaneuf’s CT Mirror article entitled “Will Malloy spend Connecticut’s shaky surplus on election-year tax cut?,” CPA Marcia Marien’s commentary piece in the Hartford Courant entitled, “State Is Broke — ‘Surplus’ Is Pocket Change” and the Wait,What? post from earlier in the month entitled, “Governor Malloy’s fake Connecticut Budget “Surplus”.
Together they paint a relatively clear picture of what is happening.
Thanks to years of irresponsible budget gimmicks, Governor Malloy inherited a budget deficit of about $3.7 billion.
That gap was filled with a $1.5 billion tax increase, a state employee concession package, some budget cuts and an impressive amount of borrowing and the use of one-time revenues including draining a number of special funds that were meant to address specific budget expenditures.
Over the past three years, leaving state positions unfilled, additional budget cuts – especially to Connecticut’s public college and universities, more raids to pull in one-time revenues, excessive borrowing for operating expenditures and some tax increases (i.e. the largest gas tax increase in state history) have allowed Governor Malloy to reach a point where the state does have a “surplus” and yet truly faces three years of budget deficits that will average over $1 billion a year.
What brought Connecticut to this precarious point is primarily the use of one-time revenues and the borrowing to pay for operating costs.
As Keith Phaneuf explains:
“Since the governor took office three years ago, close to $1 billion in operating costs have either been deferred or shifted onto the state’s credit card. Malloy criticized these very gimmicks when he was a candidate in 2010.
‘Too often over the past 16 years, and especially over the past two years, Hartford’s played a budget shell game; piles of money get moved around, erasers get used, and voila, there’s a ‘balanced budget,’ Malloy wrote in a 2010 campaign policy paper. ‘It fools only those who want to be fooled.’
Among the steps taken by Malloy and the legislature’s Democratic majority were:
Canceling an early $222 million debt payment in June 2012. Instead they used $138 million to close a year-end operating deficit and put $94 million into the Rainy Day Fund.
Refinancing debt to push $392 million in payments owed now until after the election.
Bonding $173 million in new municipal aid over this fiscal year and next.
Bonding $57 million for pollution abatement and stem cell research grants that previously were paid for out of the operating budget.
Borrowing an extra $39 million so that debt payments tied to converting state finances to Generally Accepted Accounting Principles could be deferred until after the election.”
You can read more about how gimmicks have been used to create the surplus in the Wait, What post – Governor Malloy’s fake Connecticut Budget “Surplus”
In the meantime, the answer is yes – Connecticut presently has a surplus but whoever wins the governor’s race in November 2014 will be facing the challenges associated with enormous budget deficits.
Gubernatorial Election 2014, Malloy, State Budget, State Deficit Gubernatorial Election 2014, Malloy, State Budget, State Deficit
As the end of 2013 approaches we are reminded that unlike Gepetto’s wooden puppet, many politicians have taken lying and misrepresenting the truth to unprecedented levels, without suffering the ignominious consequences that affected Pinocchio.
If that wasn’t the case, Connecticut’s Governor Dannel Malloy would be having an extremely hard time getting in and out of the Capital this holiday season.
The 2010 Gubernatorial candidate “Dan” Malloy campaigned on a platform that unlike Gov. M. Jodi Rell, he would never “kick the can down the road.”
The definition of the idiom being, of course, that “If you kick the can down the road, you delay a decision in hopes that the problem or issue will go away or somebody else will make the decision later.”
Upon taking office Malloy’s initial budget speech to Connecticut legislators included the phrase, “This is our time to do what we were elected to do, to fix what’s broken once and for all.”
Malloy added, “We will borrow not one penny for operating expenses…Too much borrowing over the years for ongoing expenses is one of the reasons we’re in the bad shape we’re in.”
His $1.5 billion dollar tax plan was sold as part of his system of “shared sacrifice;” tax increases, program cuts and state employee concessions all publicized as the best mechanism to set fix the state’s finances.
Malloy’s style is to remind people that he inherited — not created — the largest budget deficit in state history. Then, in nearly every speech Malloy has given, he works to convince voters that Connecticut’s finances are stable once again. That done he then spends the rest of the speech bragging about the success of his effort.
This year, as Governor Dannel P. Malloy provided the closing remarks to the Connecticut General Assembly on June 6, 2013, he said – before uttering the words – “May God bless you, may God bless the great State of Connecticut, and may God bless the United States of America, that “This [year’s] budget refuses to kick the can down the road…”
In order to make his point Malloy skipped over the use of one-time revenues, the largest gas tax in state history, maintaining certain taxes that were supposed to come to end, barrowing record amounts of money to fund on-going operating services and continuing to shift the burden to anyone he could, such as local property tax payers and students attending Connecticut’s public colleges and universities..
He also conveniently failed to explain that while the state budget is “balanced” through the 2014 gubernatorial election, Connecticut’s non-partisan Office of Fiscal Analysis projects that Malloy’s irresponsible kicking the can down the road budget will leave the state with a budget deficit of $1.1 billion in Fiscal Year 2016, $1.2 billion in Fiscal Year 2017 and an incredible $1.4 billion deficit in Fiscal Year 2018.
Using what can only be described as truly unparalleled fiscal gimmicks, Governor Malloy has not only gone back on his campaign promises about being fiscally responsible – time and time again – but he has set up a scenario in which the State of Connecticut and its taxpayers will be facing a budget crisis of over about $3.7 billion over the next four fiscal years – a fiscal disaster that rivals the historic deficit that Malloy inherited in the first place.
While it is still the holiday season and the more in-depth debate about the 2014 gubernatorial campaign won’t really begin until after the New Year, the Pinocchio analogy seems particularly appropriate as we brace ourselves for the coming political year.
Education Funding, Gubernatorial Election 2014, Malloy, State Budget, State Deficit Education Funding, Gubernatorial Election 2014, Malloy, State Budget, State Deficit
According to an article published in the CT Mirror and entitled, “Malloy makes no promises to increase school funding further,” when speaking to the right-wing American Enterprise Institute yesterday, Governor Malloy was “noncommittal Monday when asked during a forum in Washington, D.C., if he would further increase education funding again next year.”
In what has now become typical fashion, Malloy failed to tell the audience the whole truth.
In fact, what little funding Governor Malloy has provided for Connecticut public schools over the past three years has come with such extensive strings that it failed to provide local towns with real or meaningful options.
Even more importantly, Malloy’s new unfunded state mandates for far more standardized testing and the warped teacher evaluation program will cost Connecticut communities tens of millions of dollars. Since the state is not reimbursing towns for most of these new costs, Malloy’s proposals will actually force most Connecticut towns to increase local property taxes and reduce existing education programs as they divert scarce resources to pay for Malloy’s untested and inappropriate programs.
But like so many other things associated with the Malloy tenure, the Malloy administration has refused to provide the public with honest information about its proposals.
As Connecticut taxpayers may recall, Malloy’ mantra of “shared sacrifice” was associated with a $1.5 billion tax proposal that included higher income tax rates for everyone EXCEPT those making more than $1 million. However, Malloy’s successful effort to coddle the super-rich was never openly discussed by policymakers.
And yesterday, following the standard script, when he was asked about additional school funding Malloy responded with, “I think that it’s a little early to tell.”
What Governor Malloy failed to do was provide Connecticut voters with an honest assessment of the fiscal disaster that his administration has already created and will become increasingly apparent… especially after the next gubernatorial election.
According to the non-partisan Connecticut Office of Fiscal Analysis, Malloy’s tax and spending programs have created a situation in which Connecticut will face:
- A $1.1 billion budget deficit in the fiscal year that ends on June 30, 2015,
- A $1.2 billion budget deficit in the fiscal year that ends on June 30, 2016,
- And a $1.4 billion budget deficit in the fiscal year that ends on June 30, 2017.
Equally appalling is the fact that even this year’s state budget is balanced by using one-time revenues and budget gimmicks that Malloy promised he would not utilize when he was running for governor.
By refusing to lay out the true nature of Connecticut’s financial problems, Connecticut citizens won’t have the information necessary to engage in an honest and thoughtful discussion about the challenges and issues facing the state.
Yesterday’s speech reminds us that the Malloy administration’s consistent lack of honesty and transparency will prove to be its most notable legacy.
You can read the CT Mirror story here: http://www.ctmirror.org/political-mirror/2013/12/02/malloy-makes-no-promises-increase-school-funding-further
Connecticut General Assembly, CT Voices for Children, Malloy, State Budget, State Debt, State Deficit Connecticut General Assembly, CT Voice for Children, Malloy, State Budget, State Debt, State Deficit
During the last gubernatorial campaign, each side claimed that they had a deeper commitment to fiscal responsibility and government transparency.
Now more than two and a half years later we are further away from both concepts than most people could have possibly conceived of.
In an announcement that will come as no surprise to Wait, What? readers, a report by the Fiscal Policy Center, which is part of Connecticut Voices for Children has determined that we should consider changing our state song from Yankee Doodle Dandy to Bob Dylan’s famous ballad, “It’s Alright, Ma (I’m Only Bleeding).”
The non-partisan Fiscal Policy Center concludes;
“By relying on borrowing and one-time fixes, we’re undermining the long-term stability of the budget and gambling with these investments in our children’s future.”
The reported on the state budget that was proposed by Governor Malloy and approved by the Connecticut General Assembly “warns that the ‘quick-fix’ budget solutions adopted in the budget will deepen the state’s long-term budget deficit and could ultimately endanger funding for child and family services.”
The report goes on to explain that the new budget uses borrowing, one-time revenues, and fund transfers to close budget deficits and cover operating expenses and reports that, “ By relying on these measures, rather than recurring revenues to close the state’s budget gap…state policymakers have opened up a larger revenue hole in future budget years.”
Key problems about Connecticut’s state budget that highlighted in the new report include:
- The new state budget “relies on almost $600 million in borrowing, over $400 million in temporary fund transfers, and $500 million in one-time revenues to pay for operating expenses. Because these funding sources will dry up at the end of the two-year budget, there is currently a projected state deficit of $712 million in Fiscal Year 2016 and comparable holes in 2017 to 2018.”
- “Reliance on debt and one-time revenues will further increase budget risks for the state if economic growth does not return quickly. The state’s budget projections assume that robust economic growth will result in increased state tax revenues. With a nearly empty Rainy Day reserve fund, if this growth does not emerge, Connecticut would have little choice but to turn immediately to deep cuts, steep tax increases, and more borrowing.”
- “The state government has transformed over $1 billion in debt it owed itself and its employees into debt it now owes to bondholders, resulting in less flexibility and control of the repayment of that debt. While the state budget plan pays down funds owed to the state employee and teacher pension systems, it does so by borrowing money from private bondholders. In addition, the state has borrowed money from the private market to meet stricter accounting requirements under the rules of Generally Accepted Accounting Principles (GAAP).”
You can find the full report, entitled “A Gambler’s Budget: the Fiscal Year 2014-15 State Budget,” at www.ctvoices.org.