Ben Barnes (OPM Secretary), Budget Cuts, Corporate Welfare, Economic Development, Healthcare, Human Services, Malloy, Mental Health Services, State Budget, State Deficit Budget cuts, Economic Development, Malloy, State Budget, State Deficit
Pick up any newspaper and you are bound to see at least one story about the impact of budget cuts and another about how state governments are giving money away to private companies in an attempt to convince them to create or retain jobs.
It is quite a commentary about our times. A lack of adequate funding means people who work for schools, hospitals and nonprofit providers of human services are or will be losing their jobs, while taxpayer continue to provide the money that is being used to try and persuade businesses to pledge that they will create or keep private sector jobs.
True, it may not be the notoriety that we want, but you certainly can’t say that Connecticut hasn’t become the epitome of this paradox.
For example, earlier this week, Wait What? readers were provided an opportunity to read two posts, one entitled Has it come to this…? and another entitled And while cutting essential services, Malloy gives $100,000 to a Stamford Brewery.
The first post reported on a recent Hartford Courant commentary piece by a father lamenting Governor Malloy’s cut to essential programs that help Connecticut’s developmentally disabled residents while the second was about the Governor’s visit to a brew pub in Stamford to celebrate a $100,000 taxpayer-funded grant that the Malloy Administration was giving to help the brew pub expand.
The two stories served to enlighten readers about the reality of our times or the juxtaposition between an era where we are cutting vital services while providing private companies with what some would call economic development incentives and what others would refer to as corporate welfare.
What I failed to report was that, in addition to the brew pub, Governor Malloy and his Commissioner of the Department of Economic and Community Development (DECD), Catherine Smith, were actually visiting three other companies around the state that day. All four of the companies were receiving funds thanks to the State’s Small Business Express Program (EXP).
Over the past eighteen months, the Small Business Express Program has given out more than $80 million. According to state officials, the program has helped “create and retain more than 7,600 jobs.” The Legislature will soon be voting to give the Governor an additional $60 million for this program.
In addition to Stamford’s Half Full Brewery, Malloy was visiting Atlantic Canvas and Awning (a company that received a loan of $50,000 and a matching grant of $10,000); Automotive Core Recycling (a company that recycles and sells catalytic converters and other auto parts and received a $250,000 loan) and Katalina’s (a cup cake bakery that received a loan of $30,000 to add equipment and furnishings to their new retail shop).
According to the Department of Economic and Community Development, the $50,000 loan and $10,000 grant “support the creation of three new jobs and retained four,” the $250,000 loan translated into one new position and retained 8 jobs, while the $30,000 loan to the bakery “created one full time job and retained two full time and two part time jobs.”
The Governor’s press release that day announced that the Small Business Express Program has already created or retained more than 1400 jobs in 2013.
Meanwhile that distraught and frustrated father, along with the others who care for Connecticut’s developmentally disabled, try to cope with Governor Malloy’s $6 million cut to employment and day service programs.
Actually, that $6 million cut was part of a much bigger list of cuts Governor Malloy ordered last November 28, 2012. That day, back in November, Governor Malloy announced $170 million in budget rescissions.
The press release didn’t actually quote Governor Malloy. Instead the task of explaining the cuts was left to Ben Barnes, Malloy’s budget director. Barnes wrote, “Many of these cuts are very difficult to make, especially now when so many residents continue to struggle in a tough economy, But as painful as they are, cuts are necessary to keep this year’s budget in balance. State government needs to live within its means.”
The November list included a wide variety of reductions including a $53,000 cut to the Division of Criminal Justice’s Shooting Task Force; a $200,000 cut to the Jobs First Employment Service Program, a $488,000 cut to the state’s Environmental Quality Program; a $335,000 cut to the Department of Health’s Community Health Services Program and $41,000 cut to their Genetic Diseases Program; a $433,000 cut to the state’s Community Mental Health Centers, a $2.3 million cut to home care services that keep people out of more expensive nursing homes and hospitals and the list goes on and on.
More recently, the state budget plan that Governor Malloy proposed a month ago continued those cuts. In fact, his new budget makes even deeper cuts to a variety of vital and essential services.
So how is it possible that a Governor would be instituting record budget cuts while giving away record amounts of taxpayer funds to private businesses?
Truth be told, it is the difference between how the State operating budget works compared to the way the State Capital or Bond budget functions.
Even in the desperate times, the Capital budget continues to pump out cash.
The State’s operating budget is paid for with tax dollars. The State’s Capital Budget is funded via the state’s credit card.
Because we are borrowing the money and then paying the amount (plus interest) back over twenty years, the argument is that cutting the Capital Budget won’t help to balance this year’s operating budget. This year’s operating budget is still facing a $135 million plus deficit despite the terrible cuts instituted by the Governor and the additional cuts approved by the General Assembly.
Although Connecticut already has the highest per capita debt burden in the nation, since the word “deficit” applies to the operating budget and not the Capital Budget, we end up with a situation in which vital services are cut at the same time money is being handed out.
In fact, if Governor Malloy gets his way, we’ll see more cuts to essential services and more layoffs of hospital and human service workers in the coming months, and at the same time, the General Assembly will be allocating even more money for the Governor to hand out to the private sector.
Ben Barnes (OPM Secretary), Budget Cuts, Gas Tax, Malloy, State Budget, State Deficit, Taxes Budget cuts, Malloy, State Budget, State Deficit, Taxes
There are a lot of things I don’t agree with Senator John McKinney about, but in this case he is absolutely right. Governor Malloy’s proposed budget is a sham and a shame. It is an embarrassment that a Democrat proposed such an irresponsible budget and the Democrats in the Legislature will need to start from scratch.
As Senator McKinney put it, “”There’s so many gimmicks. I don’t know where to stop…This is the most dishonest budget I’ve seen.”
He is sadly correct in his assessment.
Governor Malloy told the Connecticut General Assembly;
“The budget I am proposing today keeps Connecticut moving forward… [and is] “an honest, balanced budget [that emphasizes] living within our means.”
But, in fact, it is a proposed state budget that;
- Coddles the rich by refusing, once again, to require them to pay their fair share in taxes
- Includes the largest gas tax increases in state history
- Shifts tens of millions in municipal aid to the state’s credit card
- Includes more than $250 million in cuts to vital social services
- Cuts $146 million in state aid for Connecticut hospitals (on top of the $103 million cut)
- Eliminates Medicaid coverage for thousands of poor parents who are now covered by the program that covers their poor children
- Eliminates the Charter Oak Health Plan, an insurance program for those who can’t get affordable healthcare elsewhere
- Reduces the state’s new Earned Income Tax Credit from 30 percent of the federal EITC to 25 percent (retroactive to Jan. 1), thereby removing a portion of the incentive that seeks to keep the working poor working as opposed to going on welfare.
- Creates a new tax on power plants and continues a surcharge on the corporation tax — both of which were set to expire next fiscal year
- Borrows $750 million replace the plan he never implemented to move the state to GAAP financing
- Creates a $631 million state budget deficit in FY16
- And MOST IMPORTANTLY balances the budget by delaying repayment of $1 billion that Connecticut borrowed in 2009 under Gov. M. Jodi Rell.
For more on this absurd plan read:
Ben Barnes (OPM Secretary), Budget Cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes Budget cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes
CT Mirror’s Keith Phaneuf has posted an article outlining the budget plan Governor Malloy will be presenting to the Connecticut General Assembly later today.
After reading the article, an experienced “Connecticut budget watcher” would be forced to say; “imagine the worst, fiscally irresponsible scenario and then triple or quadruple the negative aspects of the plan” … and you still don’t get to what Governor Malloy will be presenting for the upcoming Fiscal Year 2014-2015 state budget.
Much more will become available as the day goes on, but here are the highlights (or more accurately – low lights) of the Governor’s budget proposal.
While promising a budget that has no new taxes, preserves his education reform program and dramatically expands spending in a few key areas, it is now clear that the Governor’s plans and proposals are virtually completely achieved by adding even more debt to Connecticut – the state that already has the worst existing debt burden in the nation.
Not only does Malloy’s $1.5 billion UConn initiative rely on borrowed funds, but he solves Connecticut’s $1.2 billion projected budget short fall through a complex, even bizarre, borrowing scheme.
The key component of Malloy’s new budget plan relies on getting more revenue from refinancing debt from the last recession, borrowing money to pay for municipal aid that was paid for with general fund dollars in the past and engaging in a new gimmick to make it appear the state is finally moving forward with its shift to Generally Accepted Accounting Principles (GAAP).
In addition, Malloy’s budget proposal raises “about $140 million in new tax revenue by continuing expiring taxes on power plants and other businesses, and by reducing a tax credit for working poor families.
Apparently Malloy’s primary “budget financing plan” includes coming up with an additional $750 million dollars by “delaying repayment of $1 billion Connecticut borrowed in 2009 under Gov. M. Jodi Rell…Originally scheduled to be paid off in the 2015-16 fiscal year, the debt would be extended at least until 2018 in Malloy’s new budget.”
Meanwhile, two years ago, Candidate Malloy promised to immediately move the state to Generally Accepted Account Principles (GAAP). When Governor Malloy realized the cost of his campaign promise he shifted his plan to make a $75 million down payment in year one, a $50 million down payment in year two and then enter into a 15 year plan to shift the state to GAAP by investing $100 million a year for the next decade and a half. However, faced with budget deficits over the past two years, Malloy skipped the $75 million payment, then he skipped the $50 million payment and now he will be proposing to borrow the money to shift to state to GAAP, rather than actually make the necessary cash payments to resolve the problem the fiscally responsible way.
In addition, according to this new budget, Malloy will also turn to the state’s already overburdened credit card to provide more municipal aid. Last year he decided to borrow the funds, rather than pay cash, for the state’s $30 million municipal road aid program.
In this new budget, he is proposing borrowing another $60 million to give towns their Mashantucket Pequot/Mohegan Tribe slot revenue allocations. In that way, the state could keep all the Native American Indian Gaming funds for itself.
And the most incredible, piece de résistance, is that Malloy’s proposal to increase education funding – the plan he announced yesterday – appears to be paid for by changing (cutting) the Payment in Lieu of taxes program – the grant that towns get for lost revenue from state-owned property. Malloy’s plan apparently shifts money from the Public PILOT program to the Education Cost Sharing Formula, but calling the funds “NEW MONEY” for education even though the towns aren’t actually getting any additional money.
And as noted above, the CTMirror story suggests that “the governor will propose reducing the state’s new Earned Income Tax Credit from 30 percent of the federal EITC down to 25 percent.”
Finally, the Governor’s plan also re-writes the state spending gap law to allow this increased spending to take place without having to go through the more burdensome supermajority requirements that would otherwise have been needed under the state’s existing spending cap law.
More details to come as Budget Day 2013 progresses.
For the CT Mirror article go to: http://ctmirror.org/story/19025/malloys-push-avoid-taxes-preserve-education-spurs-more-borrowing
CTNewsjunkie also has additional details at: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/republican_lawmaker_is_not_impressed_with_malloys_budget/
Ben Barnes (OPM Secretary), Budget Cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes Malloy, Spending Cap, State Budget, State Deficit, Taxes
Connecticut is facing a $148 million budget deficit this year
If the state’s elected officials want to maintain current services, that is adopting a budget that preserves the present level of programs, the state will be facing a $1.2 billion deficit next year.
In addition, a current services budget would mean an expenditure level that is at least $1.2 billion over the state’s legal spending cap.
So what is pushing up state spending?
Andrew Doba, Malloy’s spokesperson, recently told CTNewsjunkie that items forcing the state budget up include, “Medicaid expansion under the Affordable Care Act, fast-growing pension contributions resulting from more prudent assumptions, and our commitment to convert to GAAP.”
Actually, Medicaid expansion under the Affordable Care Act (ObamaCARE) is an extraordinarily small part of the increase in Medicaid spending. The culprit is the poor economy and growing poverty which are pushing up caseloads. (But it is easier, I suppose, to blame the President)
Second, while pension costs are going up, Malloy’s plan is a drop in the bucket compared to what is needed to properly fund Connecticut’s $22 billion in unfunded state and teacher pension systems, not to mention that they are BELOW what Governor Malloy promised to allocate for those funds.
And third, to blame the conversion to GAAP accounting is beyond absurd. Candidate Dan Malloy promised to immediately move Connecticut to the path of fiscal honesty by converting the state’s account system to Generally Accepted Accounting Practices. When it became apparent the cost of honesty was “excessive” he proposed making a $75 million down payment last year and a $50 million down payment this year followed by a 15 year program to phase the state to GAAP accounting with a commitment of an extra $100 million a year.
Then, quiet like a mouse, Malloy and the General Assembly skipped the first $75 million down payment, then skipped the second $50 million down payment and the required $100 million initial payment next year is hardly what is causing the $1.2 billion dollar projected deficit.
Then, adding insult to injury, the notion of “balancing the budget” without taxes is simply not true. Present law already includes the largest gas tax increase in state history that will kick in on July 1, 2014 and Malloy’s budget is certainly going to include the continuation of taxes that were supposed to be eliminated this year.
And meanwhile, those making more than $1 million dollars are still benefiting from the fact that the income tax rate was increased for all middle-income families in Malloy’s $1.5 billion tax increase in 2011, but the rich saw no increase in their income tax rate whatsoever.
And finally, one of the greatest gimmicks of all is already starting to make an appearance.
Connecticut adopted a system of consensus revenue forecasting to remove some of the politics from the administrative branch of government’s desire to look at the world through rose-colored glasses.
The system requires the Office of Policy and Management and the non-partisan Office of Fiscal Analysis to determine what revenue is coming in.
At a press conference earlier today, Governor Malloy announced that an agreement between the State of Connecticut and Amazon had been reached that will require Amazon to collect sales tax from Connecticut residents and send the funds to the Commissioner of Revenue services.
When asked how much is expected from the agreement, Malloy announced that it would come to an extra $15 million a year and that the funds had already been built into his proposed budget. Malloy said he’d gotten the number from Amazon.
The problem, the Office of Fiscal Analysis, in its official capacity, already projected that the state would get about $9 million from a bill that required Amazon to collect the sales tax and send it on to the state – and that was before this most recent dip in economic activity.
But instead of using the more conservative, and legally appropriate fiscal impact number, or even a number developed through a consensus between his Office of Policy and Management and the Office of Fiscal Analysis, the Governor used an unconfirmed amount AND built the artificially higher number into his proposed budget.
We haven’t even gotten to budget day and already the governor is announcing assumptions that are designed to inaccurately explain away the problems and gloss over the realities of the fiscal crisis that continue to grip our state.
Yet again, fiscal reality is being pushed aside by political expediency.
Higher Education, Malloy, State Budget, State Deficit, UConn Higher Education, Malloy, State Budget, State Debt, State Deficit, UConn
By adding $1.5 billion in new state bonds on top of the remaining $235 million in UConn 2000/21st Century UConn state bonds, Governor Malloy is proposing an impressive plan to invest in “science, technology, engineering and math programs at the University of Connecticut.”
According to the Hartford Courant, “Malloy emphasized that the investment was needed to improve the state’s economy, which some see as stagnating. He predicted that over the next decade the project would attract $270 million in research grants and $527 million in business activity, as well as supporting more than 4,000 permanent jobs.”
“Quite frankly this investment should have been made 10 years ago,” Malloy said. “If it were made 20 years ago, our economy would be stronger today.”
Malloy’s plan would include $450 million for new science and engineering facilities and $770 million in infrastructure improvement, including a major expansion of UConn’s Stamford campus. The plan would also increase the number of undergraduates attending UConn from 17,000 to about 24,000.
While the University of Connecticut and Connecticut’s other public colleges and universities definitely need more operating support, the Governor proposal overlooks three key points.
First, over the past two years, this Governor has implemented the deepest cuts in state history to the University of Connecticut and the state’s other public institutions of higher education. UConn alone has been hit with over $50 million in cuts. It wasn’t that long ago that the state provided about 50 percent of the funds needed to run the University of Connecticut. As a result of the on-going reductions in support, the state’s share of funding for UConn has dropped below 30 percent. These cuts have translated into program reductions and much higher costs to students and parents. In essence, students are already being asked to pay more and get less.
Second, more recognition should be given to the fact that the state has already invested $2.3 billion in the University of Connecticut through the UConn 2000 and 21st Century bonding program. Those funds have allowed UConn to completely overhaul its facilities. Thanks to those funds, UConn has a new chemistry building, a new biology building, a new agricultural biotechnology building, a new marine science facility, two new engineering buildings, new and renovated facilities for math, physics and material sciences, a new pharmacy building and numerous other new specialized labs and classrooms.
While more facilities would certainly be optimal, what UConn desperately needs are funds to staff the new facilities and create the appropriate teaching, research and service programs that were supposed to go into those new facilities.
As most people recognize, borrowing should be used for buildings, not on-going programs.
However, in this case, while Malloy’s plan moves money around, significant amounts of the new bonding would be used to pay for new faculty members; 1,400 scholarships for top students; 50 doctoral fellowships; and 2,000 grants for students and faculty to launch projects.
Finally, Connecticut already faces significant debt and long-term liabilities that must be paid. In fact, these are liabilities that the state MUST pay off in the next couple of decades. Before adding more debt and liabilities to the state’s books, state officials must take far more aggressive action to increase funding to reduce the existing liabilities. The following chart summarizes Connecticut’s existing debt and liabilities.
||Amount of State Debt or State Unfunded Liabilities
|State Pension Fund
|Teacher Pension Fund
|Post Retirement State and Teacher Health Benefits
UConn definitely needs more funding. A more realistic approach to increasing operating funds would have been a better step forward.
You can read more about Malloy’s proposal via the following links: http://www.courant.com/news/breaking/hc-engineering-uconn-0201-20130131,0,4372437.story and http://ctmirror.org/story/18962/21-billion-plan-uconn and http://today.uconn.edu/blog/2013/01/uconn-state-officials-announce-launch-of-next-generation-connecticut-initiative/
Budget Cuts, Higher Education, Malloy, State Budget, State Deficit, UConn Malloy, State Budget, State Deficit, UConn
According to a breaking story from the Hartford Courant, “Science, technology, engineering and math programs at the University of Connecticut could get a $1.5 billion boost over the next decade, with the intention of creating a pipeline of talent that will yield substantial returns for the state workforce and economy.”
Governor Malloy has scheduled a press conference for later today to explain his initiative, but Kathy Megan of the Courant writes that the so-called Next Generation Connecticut program would:
“Increase faculty in science, technology and engineering by 258 at the three campuses, in addition to 290 new faculty the university is in the process of hiring.
Outdated classrooms, laboratories, research space and infrastructure on the Storrs campus would be renovated and new housing would be designed for the students.
The Stamford campus would expand its digital design program, creating a school of fine arts and digital design and media, while also expanding business programs in financial management, international business, global risk management, sports management and other areas. There would be some money for student housing.
In Hartford, the program would help cover the relocation of the Greater Hartford branch from West Hartford to downtown Hartford — a move that is expected to take place within a year — including the construction of laboratories. It also would fuel a collaboration with community colleges and be used to attract “high poverty, but high-potential students,” a source said, and will be used to enhance internship opportunities for undergraduates and those in graduate professional programs.”
Well at least there is the money for the mysterious move of UConn’s West Hartford branch to downtown….
So the proposal is $1.5 billion?
One would have to assume that this initiative will be funded through additional borrowing (bonding money) since the state is facing a $1.2 billion plus deficit next year and it will be hard pressed to maintain existing services, let alone add major new programs, in the years to come.
As a result of UConn 2000 and 21st Century UConn, the state of Connecticut has already committed to borrowing $2.3 billion – meaning it will cost taxpayers well over $4 billion just to pay back the funds that have already been borrowed.
And, of course, as noted in yesterday’s Wait, What? post, Connecticut is already the most debt laden state in the nation.
But another $1.5 billion in borrowing?
[As an aside, don’t get me wrong. I may be known as one of UConn’s harshest critics but I’m also one of its strongest supporters. I represented UConn and Mansfield in the Connecticut General Assembly for ten years. I wrote the Higher Education Autonomy and Flexibility bill that gave Connecticut’s public colleges and universities the autonomy they now have. I designed and coordinated the UConn 2000 advocacy campaign that led to the state’s investment of $1 billion in 1995. I supported 21st Century UConn that extended that program by $1.3 billion in 2005. And I co-chaired the Governor’s Commission on UConn 2000 that investigated the massive construction, management and financial problems associated with that spending. It was an investigation that discovered that at one point UConn had more than 5,000 students living in dorms that didn’t meet fire code. In fact, the investigation discovered UConn wasted tens of millions of dollars during the first decade of the UConn 2000/21st Century UConn program. Thankfully, all the Commission’s recommendations were adopted by the Legislature, much of it over UConn’s opposition, and the program got back on track.]
But another $1.5 billion in borrowing?
Considering the massive amount of state debt and the unfunded pension liabilities and the lack of sufficient funds for post-retirement health benefits, and the money needed to put Connecticut on GAAP accounting, Connecticut will have a difficult, if not impossible, time paying its existing bills.
Is it possible that the Governor is suggesting more debt be added?
Then again, maybe Malloy has identified a creative way to finance this initiative.
Check back later for more details.
Until then, here is the link to the Courant story: http://www.courant.com/community/mansfield/hc-uconn-engineering-school-0131-20130130,0,4906946.story
Budget Cuts, Human Services, Malloy, State Budget, State Deficit Malloy, State Budget, State Debt, State Deficit
UPDATED: This morning’s blog identified today as Connecticut Budget Day, the day Governor Malloy goes before a joint session of the Connecticut General Assembly to present his proposed budget for the next two fiscal years. Malloy’s speech is actually on February 6, 2012.
Apologies for jumping the gun. I meant to suggest that today’s announcement about a new fund of borrowed money is a perfect snap shot of how the Malloy Administration will be approaching the next budget cycle. The underlying story was covered in a CTNewsjunkie news article that was posted late last night.
Governor To Announce New Nonprofit Funding Initiative
“Less than 24 hours before the state’s nonprofit community providers were to rally Wednesday morning to draw attention to an “already frayed safety net,” Gov. Dannel P. Malloy announced a new plan to help fund their efforts.
According to sources, Malloy plans to join them at the rally to announce plans to establish a new state bond pool specifically designated for nonprofit community-based providers. The $20 million pool is expected to enhance opportunities by allowing nonprofits to invest in capital projects that will lower administrative costs and improve the delivery of services.”
Over the past two years, Governor Malloy has made deep and historic cuts to Connecticut’s human service infrastructure. Vital services have been reduced for some of Connecticut’s most vulnerable citizens. The cuts have been far, far in excess of $20 million dollars, but a promise for a small pot of bonding funds turns a protest into a rally of support.
Meanwhile, those making more than $1 million a year saw no increase in their income tax rate, despite a $1.5 billion tax package that disproportionately hit Connecticut’s middle-income families.
With more cuts coming in the proposed FY14 -FY15 budget, Malloy’s plan is apparently to borrow more, including the small pot of money for Connecticut’s non-profit human service providers.
With a projected deficit for the next fiscal year in excess of $1.2 billion, the greater American motto can already be heard ringing through the Capitol – Keep taxes down; shift the cost to our children.
Connecticut already ranks #1 in nation in state debt with a debt amount of over $5,200 per person compared to a national state average of $1,404 per person.
More details about how Governor Malloy plans to produce a balanced budget without major new taxes will be forthcoming on the day of his budget presentation, which is scheduled for February 6, 2013 at noon.
Ben Barnes (OPM Secretary), Budget Cuts, Democratic Legislators, Malloy, State Budget, State Deficit Ben Barnes, Budget cuts, Malloy, State Budget, State Deficit
Last Wednesday’s blog post was entitled, “Wait,What? OPM Secretary Barnes says state budget deficit at $64.4 million.”
The article sought to remind readers that back in December, State Comptroller Kevin Lembo announced that the state deficit was exceed $415 million, but rather than accept the word of the Constitutional Officer responsible for determining the deficit, Governor Malloy and administration decided to claim the Comptroller was wrong, or as they put it, wrong again.
Readers may recall, immediately after Lembo released his official certification that the deficit would $415 million and not $365 million as Malloy’s budget chief had announced, Roy Occhiogrosso, sent an email to reporters that read; “We disagree with the number the comptroller is using today… The deficit mitigation plan the governor will propose within the next couple of weeks will, based on the best available data at the time, bring the current-year budget into balance.”
The Governor, himself, got in on the act, mocking Lembo’s prediction and saying, “These numbers are going to go up and down…We’re moving forward with our package, which addresses a set of numbers…The comptroller thinks we will spend more money than we did — he may be right…I was told similar predictions were made last year and they didn’t turn out to be right, so we’re dealing with the numbers we believe currently represent that challenge.”
It is worth repeating that Malloy summarized his position by saying, “We’re going to continue going down the path of dealing with it in a forthright, fair, and transparent manner.”
And thus the Malloy Administration and the Legislature enacted budget cuts and revenue “enhancements to eliminate a $365 million deficit.
What prompted the Wait, What? post in the first place was the announcement by Malloy’s budget chief that – even after the Governor’s budget mitigation actions – the state budget deficit now stood at $64 million.
Well, now we learn that the Office of Fiscal Analysis, the nonpartisan fiscal analysts who report to the Connecticut General Assembly, has determined that the deficit is not $64 million but $140 million.
As Keith Phaneuf reports in the CTMirror, “The state budget deficit is more than twice the size Gov. Dannel P. Malloy’s administration reported this week, according to a new analysis released Friday by nonpartisan legislative analysts.”
The full explanation can be found in Phaneuf’s story, but suffice to say the Malloy Administration failed to reveal all of the excess spending that it taking place and misreported some revenue related information.
Read Phaneuf’s report here: http://ctmirror.org/story/18895/nonpartisan-analysts-say-state-budget-deficit-approaches-140m
Soon we’ll receive the even more shocking and disturbing news of what this larger deficit means for next year’s budget.
While the Malloy Administration may seek to minimize the projected gap when he releases his proposed state budget for fiscal years 2014 and 2015, the latest numbers from the Office of Fiscal Analysis suggest that next year’s budget shortfall is not the $1 billion the Governor’s Office has hinted at but closer to $1.4 billion or more. Traditionally, OFA should be announcing their FY14 projection soon. I’m sure CTMirror will have the details the moment the numbers become available.
But what is clear is that assuming Connecticut seeks to continue to maintain its present level of diminished services, the gap between revenue and expenditures could be in the range of $1.4 billion or more for the coming budget year – almost the size of the tax increase that was adopted just two years ago.
Ben Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Deficit, State Legislature Ben Barnes, Budget cuts, Malloy, State Budget, State Deficit
A state budget deficit at $64.4 million.
The Malloy administration goes for broke with its misleading approach to the state’s budget deficit problems.
Yesterday, Secretary of the Office of Policy and Management Ben Barnes issued his monthly budget letter to the State Comptroller announcing that due to a decline in revenue (and some additional excess spending); this year’s Connecticut’s state budget deficit now stands at $64.4 million.
The Malloy administration, along with some in the media, act as if this news comes as a surprise.
There is one thing we can say for sure, the fact that the state of Connecticut is facing more than a $50 million deficit should come as absolutely no surprise to anyone.
On December 3, 2012, State Comptroller Kevin Lembo officially certified that Connecticut had a $415 million state budget deficit.
The next day the headline in the CTNewsjunkie read, “Malloy Not Convinced Deficit Is Higher.”
The Malloy administration was sticking with their projection that the state had a $365 million budget deficit come Hell or high water.
Immediately after Lembo released his official certification of the $415 million deficit, Roy Occhiogrosso, the governor’s senior adviser shot an email off to reporters that read;
“We disagree with the number the comptroller is using today… The deficit mitigation plan the governor will propose within the next couple of weeks will, based on the best available data at the time, bring the current-year budget into balance.”
Malloy piled on, responding to Lembo’s announcement by telling reports, “These numbers are going to go up and down…We’re moving forward with our package, which addresses a set of numbers…The comptroller thinks we will spend more money than we did — he may be right…I was told similar predictions were made last year and they didn’t turn out to be right, so we’re dealing with the numbers we believe currently represent that challenge.”
The Governor summarized his position by saying, “We’re going to continue going down the path of dealing with it in a forthright, fair, and transparent manner.”
And so the Malloy Administration proceeded in their “forthright, fair, and transparent manner” and took action to eliminate a $365 million deficit.
In his December 10th article, the CT Mirror’s Keith Phaneuf wrote, “State Comptroller Kevin P. Lembo is projecting a $415 million budget hole, while the administration pegs the shortfall at $365 million. Malloy’s proposal, if backed by the legislature in a special session scheduled for Dec. 19, would be enough to close out the smaller figure.”
On December 17, Phaneuf wrote, “The tentative [budget] plan, coupled with emergency spending cuts ordered by Malloy last month, would cover the entire $365 million deficit projected by the administration for the fiscal year that ends next June 30. It would cover all but $50 million of the $415 million shortfall projected Dec. 1 by state Comptroller Kevin P. Lembo.”
And on December 19th, after Malloy’s Deficit Mitigation bill passed the legislature, Phaneuf wrote “It does fall short, though, of covering the larger, $415 million deficit projection issued Dec. 1 by state Comptroller Kevin P. Lembo.”
And on January 2, 2013 Phaneuf and other reporters covered Lembo’s announcement that the state was still facing a deficit of nearly $50 million.
And so here we are… It is two months AFTER Lembo warned the Malloy administration that the deficit was more than $50 million higher than what they were claiming and the Malloy’s budget chief announces that the deficit now stands at $64 million.
Consider it a painful, but enlightening tribute to Governor Malloy’s pledge that he was dealing with the state deficit in a “forthright, fair, and transparent manner.”
Budget Cuts, Democratic Legislators, Malloy, Republicans, State Budget, State Deficit, State Legislature Malloy, State Budget, State Deficit
With little debate, and even less awareness of the ramifications of passing the bill, the State House of Representatives voted 140 to 3 and the State Senate voted 31 to 3 to pass a deficit mitigation bill that included a record breaking set of cuts to social services and education programs.
Considering the bill wasn’t even available to review until just before the vote, legislators would be hard-pressed to claim that they knew the magnitude of the cuts or how those cuts would impact their constituents AND some of the most vulnerable people in our state.
Ending partisan gridlock is a grand thing, and creating bi-partisan cooperation has plenty of benefits, but one would hope that political expediency wouldn’t take the place of good public policy. Looking at the list of cuts, its pretty clear political expediency won out.
In this case, led by a Democratic Governor and a Democratic Legislature, along with the support of nearly every single Republican, Connecticut’s elected officials chose to spare millionaires from having to pay their fair share in income taxes and instead cut just over $250 million in funding for state services, on top of the $120 million Governor Malloy cut last month.
As reported in the CTMirror, “Connecticut’s hospitals took the single-largest hit in the package adopted Wednesday, losing nearly $90 million.” With Malloy’s rescissions last month, Connecticut’s hospitals have now lost a total of $103 million. These were funds that hospitals received to cover the costs of uninsured patients and help to make up for the below-cost reimbursement rates for Medicaid patients.
In the short-term, the funding cuts to hospitals will lead to additional layoffs at many Connecticut hospitals, and in the longer term, the cuts will produce higher health insurance premiums, as costs are shifted even more quickly to those who have health insurance.
The massive cut to the 29 acute-care hospitals did produce some of the no votes.
As CTNewsjunkie reported, “Johnson Memorial Hospital is just emerging from bankruptcy and can’t handle a $608,000 cut, Bacchiochi said. It’s also the largest employer in her mostly rural district and she’s concerned it could be the straw that breaks the camel’s back. Guglielmo [the State Senator from Stafford] cited Johnson Memorial Hospital as one of the reasons he voted against the bill.”
In addition to hospitals, significant cuts were made to a wide variety of community-based health, mental health and social service programs including autism services, mental health housing programs, re-entry programs for ex-offenders, after school programs and many of the state’s arts and culture grants.
In addition to the actual cuts, by reducing state funding for Medicaid programs, Connecticut lose about $60 million in funding from the Federal government, since Washington reimburses Connecticut 50 cents for every dollar the state spends on those programs.
Beyond the cuts, the deficit mitigation bill also increased revenue by $30 million by limiting a couple of business tax credit programs, including a relatively minor change to the film tax credit and the expansion of an element of the tax on electricity generation.
The budget mitigation plan also swept up $11 million in one-time funds that had been reserved and devoted to specific targeted programs (such as energy conservation) and shifted the state’s $10 million stem cell research program to the state’s credit card.
Finally, the plan collects and extra $9.5 million, as CTMirror explains, “by intensifying efforts to identify and prevent state income tax fraud.”
There was a fair amount of discussion about eliminating longevity payments for non-union employees. Completely eliminating the longevity payments, those being the twice a year payments that employee with more than ten years of state service receive, would save $6 million a year.
Under the plan that passed last night, the 3,200 non-union state employees will get their longevity payments one last time in April AND those last payments will be added to each employee’s base pay. However, after that, longevity payments for the non-union employees will be eliminated.
A variety of education programs also got cut, “saving” the state budget about $11 million. The UConn Health Center was also cut an additional $4 million. The higher education cuts come on top Malloy’s recent $10 million cut to UConn and $14 million cut to the Connecticut State Universities and Community Colleges. Malloy also made a multi-million dollar cut to student financial aid for lower-income Connecticut students attending public colleges in the state, money students had been promised next month.
Additional coverage of the budget document can be found at CTMirror: http://ctmirror.org/story/18530/state-house-passed-budget-deficit-mitigation-bill-bipartisan-fashion, CTNewsjunkie: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/general_assembly_erases_deficit_with_bipartisan_support/ and the Courant http://www.courant.com/news/connecticut/hc-special-session-20121219,0,3466632.story