Dan “Read My Lips” Malloy goes with $900 million plus in new revenue…

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During his campaign for re-election, Governor Dannel Malloy told Connecticut’s voters that there was no state budget deficit this year … [Despite the fact that a sea of nearly $250 million in red ink appeared after Election Day.]

And Malloy’s most consistent and outlandish claim was that he would not propose or accept any new taxes if the citizens of Connecticut re-elected him to a second term.

But in this morning’s exclusive CT Mirror story on the new state budget plan that Governor Malloy will be proposing later today, we learn that the Governor will call for more than $900 million in new revenue over the biennium, of which about $500 million of that amount will come about by repealing pre-election tax breaks that Malloy proposed and signed into law during the past two years.  Malloy is also apparently reneging on the tax cuts he said he would institute if re-elected.

CT Mirror Reports;

“The biennial budget Gov. Dannel P. Malloy intends to propose today would erase a two-year, $2.5 billion shortfall with $1.6 billion in spending cuts and $900 million in additional revenue, an attempt to say he is equitably spreading pain while keeping a pledge not to raise taxes.”

Malloy, a Democrat re-elected last fall, is proposing a three-pronged approach to his second fiscal crisis in four years: deep spending cuts, combined with additional revenue raised by deferring promised tax cuts and boosting tax receipts without changing rates.

[…]

With a proposal that relies on $900 million in new revenue, Malloy can expect a vigorous debate over what constitutes a tax increase. According to administration officials, the budget creates no new taxes, nor does it raise rates, but it generates additional revenue by restricting tax credits, eliminating exemptions and making other tax rule changes.

Malloy campaigned on a pledge not to raise taxes and to deliver more than half a billion dollars in tax cuts over the next two fiscal years.

The governor’s plan bolsters net revenues by more than $900 million over the next two years combined. It does deliver a promised sales tax exemption for over-the-counter medications, worth about $29 million.

More on Malloy’s State Budget as it becomes available later in the day.

Ya know that “no tax pledge” I made during the campaign, well I lied! – Surprise

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So it’s finally official….

During last year’s gubernatorial campaign Governor Dannel “Read My Lips” Malloy repeated over and over again that he would not propose or accept any tax increases if the voters of Connecticut elected him to a second term in office.

[See 5/6/14 Wait, What Posts – Malloy’s “NO TAX” pledge will send Connecticut into the abyss or 9/3/14 Foley and Malloy are just plain wrong on taxes]

Of course, with the state of Connecticut facing a significant and growing budget deficit this year and a projected shortfall of at least $1.3 billion in next year’s state budget, the claim was never anything other than a hoax.

But hoax or not, Malloy not only stuck to his “no-tax” campaign promise but claimed that there wasn’t even a state budget deficit this year nor would there be a state budget deficit next year.

Well yesterday, the luster surrounding his absurd “no tax” pledge came off as Malloy confirmed that in his state budget address tomorrow he would be proposing to repeal the state law that eliminates the sales tax exemption on clothing costing less than $50, a law that he signed last spring and was scheduled to take effect on July 1, 2015.

Malloy told reporters, “There is a reality (that) this is a tough budget.  No one is sugar coating that.”

According to media reports, Malloy is still insisting that he is not raising taxes – although in the real world – if you propose a bill that requires Connecticut consumers to pay a 6.35 percent sales tax rate on clothing costing less than $50 — when they would not have done so without that proposal – it is called raising taxes.

But Malloy’s retort is that although consumers will actually have to pay the sales tax on clothing – starting July 1, 2015 – when they would not have otherwise been required to do so – the sales tax rate will drop from 6.35 percent to 6.20 percent on Nov. 1 2015 and will drop again to 5.95 percent on April of 2017, more than two years from now.

According to Keith Phaneuf at the CT Mirror,

“The governor tried to emphasize Monday that his focus on tax relief right now, given the limited resources available to him, “has to be middle-class-centric.”

But last May, when nonpartisan analysts were projecting the same post-election fiscal woes that they are reporting now, the governor was adamant that no taxes would rise after the election.

“I gave at the office,” he quipped, implying that the $1.8 billion in tax hikes he signed to close a big deficit in 2011 were sufficient.

As Phaneuf observes in his latest article, what’s changed?

“Since next year’s projected deficit – $1.3 billion – is the same as it was when Malloy took his no-tax-hike pledge…”

What has changed?

Well, Malloy got himself re-elected and now reality is starting to set in for the Governor and the people of Connecticut..

You can read more at; http://ctmirror.org/2015/02/16/malloy-coy-on-whether-his-plans-add-up-to-a-tax-increase/

Parents, Teachers and Taxpayers – Beware the Achievement First Inc. Money Grab in New Haven

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[This is the first in a series of articles about Achievement First Inc.’s proposed New Haven Elm City Imagine School]

Aka – The Charter School Industry’s step by step dismantling of public education in Connecticut.

This Wednesday, February 18, 2015, Governor Malloy will play his hand as to whether he will insert taxpayer funds into next year’s state budget in order to fund Steve Perry’s dream of opening a privately-owned, but publicly-funded charter school in Bridgeport.  An out-of-state company is also counting on Malloy to come through with the cash needed to expand their charter school chain into Stamford, Connecticut.

Both charter school applications were vehemently opposed by the Bridgeport and Stamford Boards of Education.

However, despite that opposition from the local officials responsible for education policy and despite the fact that Connecticut doesn’t even fund its existing public schools adequately and the fact that the State of Connecticut is facing a massive $1.4 billion projected budget deficit next year, Governor Malloy’s former Commissioner of Education, Stefan Pryor, and Malloy’s political appointees on the State Board of Education approved four new charter school proposals last spring.

Initial funding for two of the four applications was included in this year’s state budget, New Haven’s Booker T. Washington charter school and yet another charter school for Bridgeport.

Now the charter school industry is counting on Malloy to divert even more scarce public funds away from the state’s public schools so that Steve Perry can start pulling in a $2.5 million management fee from a charter school in Bridgeport and the out-of-state company can open up a revenue stream from a new charter school in Stamford.

While most public education advocates are focused on the Malloy administration’s ongoing attempt to privatize public education via policies at the state level, the politically connected Achievement First Inc. Charter School chain is using a completely different approach as it seeks to pull off a deal in New Haven that would shift existing funds away from New Haven’s public schools and into the coffers of the Achievement First operation.

Of course, Achievement First Inc. is the charter school chain founded by Stefan Pryor, Malloy’s former commissioner of education.

Achievement First Inc. is also the charter school chain that gets the lion’s share of the $100 million in public funds that are already diverted to charter schools in Connecticut.

Achievement First’s latest gambit is called the Elm City Imagine School.  Achievement First already owns and operates the following taxpayer-funded New Haven Charter Schools;

Amistad Academy Elementary School

Amistad Academy Middle School

Amistad Academy High School

Elm City College Preparatory Elementary School

Elm City College Preparatory Middle School

Achievement First Inc. also owns charter schools in Hartford, New Haven, New York City and Rhode Island.

With the New Haven proposal, Achievement First, Inc. is attempting to side-step the entire state charter school authorization process.  They are trying to use a mechanism whereby state and local taxpayer funds would be allocated by the New Haven Board of Education directly to Achievement First’s new “experimental school.”

The only hurdle that Achievement First Inc. needs to overcome is getting the approval of the New Haven Board of Education…and it appears that they are well on the way to do just that as early as their February 23, 2015 meeting.

The New Haven Board has scheduled a second and final public hearing on the proposal tomorrow, Tuesday 2/17 at 5:30, nicely timed to take place during school vacation.

The New Haven Board of Education is not democratically elected by the citizens of New Haven.  It is one of the only boards of education in Connecticut to be appointed by the mayor of the community.

In this case, the New Haven Board of Education is appointed by Mayor Toni Harp – who, thanks to an earlier sweetheart deal – happens to sit on the Achievement First Inc. Board of Directors for the Amistad Academy schools.

Another member of the New Haven Board of Education is Alex Johnston who is the former CEO of ConnCAN.  Johnston now, “develops and implements strategies for philanthropists on education reform advocacy and political initiatives.”

ConnCAN is the charter school advocacy group that is not only associated with Achievement First Inc. but it is the entity that led the record-breaking $6 million dollar lobbying campaign in support of Malloy’s 2012 Corporate Education Reform Initiative.

ConnCAN is also the charter school advocacy group that recently held a rally on the New Haven Green to “save kids trapped in local failing public schools.

And ConnCAN is the charter school advocacy group that was created by Jonathan Sackler, who is the multi-millionaire who played such a pivotal role in helping Stefan Pryor with the creation of Achievement First Inc.

Sackler now serves on the Board of Directors for Achievement First Inc.  and the Board of Directors for ConnCAN

Most recently, Sackler and his family were the largest contributors to Malloy’s re-election effort, pumping well over $100,000 into the various committees that paid for the Governor’s campaign activities.

Achievement First’s Elm City Imagine

Achievement First’s Elm City Imagine (designed to become a K-4 school) will be Achievement First Inc.’s initial foray into the “Greenfield” model. The model designed with the help of the inventor of the computer mouse.”

Achievement First Inc. is also using public funds to insert the “Greenfield Model” into its Elm City College Prep Middle School.

Among the many controversies associated with this new proposal is that Achievement First Inc. has successfully prevented the unionization of its schools and is now looking to use even more public funds to hire employees who would have no collective bargaining rights.

Achievement First Inc. is also notorious for relying on Teach For America recruits in an effort to promote the churning of staff to keep expenses down and limit the likelihood of unionization.

Alex Johnston, the former ConnCAN CEO who and member of the New Haven Board of Education is quoted as saying

“We need statewide policies that allow educational innovations like Teach for America or Dacia’s schools [The Achievement First Inc. Charter School chain] to spread far and wide.”

[Article Update at 3pm 2/16/15 – Johnston has announced the due to the conflict of interest he will not be voting on application, although it doesn’t change much considering the political dynamics surrounding the project.]

Of course, Achievement First Inc. also made national news when it was reported that their “zero-tolerance” discipline policies led to an extraordinary number of kindergartners being suspended.

Check back for the next installment of this series.

You can also read more about the Achievement First Inc. plan via the following New Haven Independent articles;

Teachers, Parents Organize Against Charter Deal

The School Of The Future Gets A Dry Run
Teachers Union Prez Pens “Imagine” Critique
Charter Plans Detailed; Parents Weigh In
Elm City Imagine Sparks Debate
NHPS, AF Team Up On Experimental School
Elm City Charter Eyed For Futuristic “Conversion”
City’s Charter Network Hires San Francisco Firm To Design The K-8 Public School Of The Future

 

News Flash: Malloy reneges on sales clothing exemption commitment to pay for tiny cut in sales tax

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Updated – see new CT Mirror story

A Wait, What? moment if there every was one…

Nine months ago, Governor Malloy signed a bill into law that exempting clothing costing less than $50 from the state sales tax starting on July 1, 2015.  Throughout his recent campaign for re-election he promised over and over again that the his tax cuts would remain in law despite Connecticut’s budget deficits.

But today, everything changed…. And just wait till you see how he is trying to cover up his action…

Today Governor Malloy took to WFSB-TV’s Face The State to announce that later this week, when he presents his budget plan to a joint session of the Connecticut General Assembly on how to solve next year’s projected $1.4 billion budget deficit, he will be proposing a reduction in Connecticut’s sales tax from its current rate of 6.35 percent to 6.20 percent starting on November 1, 2015 (a quarter way through the coming fiscal year) and then to 5.95 percent in the 2016-17 fiscal year.

Without ever telling WFSB Face the State host Dennis House how the sales tax cut would actually be paid for, Malloy had the gall to proclaim, “I think it’s a way to give some relief to the middle class as the economy keeps improving.”

What Malloy failed to explain was the he is “finding the money” for this minor cut by reneging on the cloth tax exemption that is already in law and scheduled to go into effect on July 1, 2015.

So let’s all understand just what Governor Dannel Malloy is proposing.

Malloy is saying he will make a microscopic cut in the sales taxes while at the same time repealing a law that he signed that eliminates the sales tax on clothing and he saying that his proposal is designed to “give some relief to the middle class”

The CT Mirror’s Keith Phaneuf was the only news outlet to figure out Malloy’s incredible bait and switch tactic noting that the,

“[Clothing Tax Break] scheduled to start this July under legislation Malloy signed last May – would save consumers $145 million next year,” while “Gov. Dannel P. Malloy says he will propose lowering Connecticut’s sales tax rate this week, while eliminating a partial exemption on clothing to produce a net tax revenue increase of $68 million in the next fiscal year.”

To reiterate, Malloy told TV viewers that he was LOWERING the sales tax rate to levels not seen since 1971, but the way he is doing it by reneging on a promise – that he signed into law – that would have provided for a $50 sales tax exemption on clothing – a change that was supposed to take place in less than five months.

According to Phaneuf,

“Mark Bergman, his spokesman, released limited revenue numbers after the broadcast and confirmed that the primary change would be the elimination of a partial sales tax exemption on clothing.”

Bergman said the governor’s proposed changes would yield a net sales tax revenue increase of $68….”

You can read more of the ugly details at http://ctmirror.org/2015/02/15/malloy-would-cut-sales-tax-rate-but-broaden-its-reach/

Updated CT Mirror story - http://ctmirror.org/2015/02/15/malloy-would-cut-sales-tax-rate-but-broaden-its-reach/

Yippee – No New Taxes and you’ll be able to buy “cheaper” liquor for longer hours

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As we like to say here at Wait, Wait? You better sit down for this one,

Although the State of Connecticut is facing a projected $1.4 billion state deficit next year, Governor Dannel Malloy’s most significant campaign promise was that he would neither propose or accept any tax increase should the voters of Connecticut elect him to a second term.

In a made for media moment, Malloy went on a major morning radio show this morning to announce that rather than raise taxes, he would be proposing that Connecticut liquor stores be allowed to stay open on Mondays – Saturdays until 10 p.m and all the way until 8 p.m. on Sundays.

The hosts dutifully toasted the Governor’s proposal with tequila.

Malloy’s plan, according to WFSB TV News, will “lower the price of alcohol in the state and raise additional tax revenue for the state.”

Lower prices and more revenue without raising taxes….Hooray!

In what one supposes is a parallel proposal to promote more competition or create an incentive for more Corporate Hedge Funds to invest their money in liquor stores, Malloy also announced that he will also be proposing legislation that would allow liquor store owners to own up to six stores, rather than being capped at the existing number of three.

For those who are scratching their heads about how longer hours and more stores selling liquor will lower prices when the state mandates minimum per bottle pricing for all  types of alcohol in Connecticut, the Malloy administration explains that the Governor will also propose revising, but not repealing, Connecticut minimum liquor pricing policies.

According to the CT Mirror, “He says he would maintain minimum bottle pricing, but allow steeper discounts than are now allowed by law, namely by letting retailers charge consumers as little as the wholesale price.”

Considering governors normally release what they consider to be juicy tidbits in the week leading up to their budget proposal, Malloy’s announcement today really builds up the level of excitement for next week when he will propose his complete budget package to a joint session of the Connecticut General Assembly on February 18, 2015.

You can read more about this breaking news at the Courant via His Budget Might Induce Drink, But Malloy Wants Lower Liquor Prices and  CT Mirror at  His budget might induce drink, but Malloy wants lower prices

Malloy, Budget Deficits and the failure to follow State Law

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In the real world, a budget deficit occurs when a government’s expenditures exceed the revenue that it generates.

According to Connecticut state law, if the State Comptroller projects that the budget deficit exceeds 1 percent of the state budget ($174.6 million), the Governor MUST immediately develop a Budget Mitigation Plan and submit it to the Connecticut General Assembly for review and approval.

As Wait, What? readers will recall the one true constant during the 2014 gubernatorial campaign was Governor Dannel Malloy’s claim that there was no state budget deficit this year, nor would there be one.  Period, end of story.

State law also requires the Office of Policy and Management to provide the State Comptroller, on the 20th of each month, a letter outlining any projected revenue shortfalls or areas where the executive branch is spending more than what was budgeted for a given line-item or program.

During the entire campaign, Malloy repeatedly said that there was no state budget deficit and ten days before Election Day, Malloy’s Budget Director, Ben Barnes, made the incredulous claim that the Malloy administration was not overspending on a single line- item or program.  Barnes reiterated that the State of Connecticut did not have, nor would it have a budget deficit.

At the time, a CT Mirror story written by Connecticut’s leading budget reporter, Keith Phaneuf, led with the headline, “Malloy boldly projects perfection in last budget update before election.”

As Phaneuf reported at the time,

It’s came as no surprise this week when Gov. Dannel P. Malloy’s administration reported the state budget was in balance.

What was far more surprising, though, was the added assertion there are no signs of cost overruns in any of the dozens of agencies supported by this year’s $19 billion budget.

For the first time in at least nine years, an administration reported no “deficiencies” that need to be tracked thus far into the fiscal year – a claim that Malloy’s critics attacked as extreme political spin in the final days of the campaign.

Within days, Connecticut’s independent, non-partisan Office of Fiscal Analysis identified a series of areas where the state was overspending, but with the Democrat’s Get-Out-The-Vote operation already underway, the Malloy administration dismissed the information and continued to claim that there was no state budget deficit.

Then, just ten days after Election Day, the state deficit “began to appear.”

However, the Malloy administration continued to downplay the situation in an effort to persuade the State Comptroller to say that the projected state deficit did not exceed the 1 percent trigger, which would have required Governor Malloy to develop and submit a comprehensive Deficit Mitigation Plan.

Now, ninety days after Election Day, the information provided by the independent, non-partisan Office of Fiscal Analysis reveals that the real State Budget deficit was more than $225 million, well in excess of the $174.6 million Deficit Mitigation Level.

And yet Governor Malloy and his administration never submitted a Deficit Mitigation Plan because the State Comptroller never determined that the trigger level had been met.

The scheme allowed the Malloy administration to continue their ongoing effort to mislead the General Assembly, the citizens of Connecticut and the media.

How did this happen?

Over the last three months, the Office of Policy and Management submitted their legally required letter to the State Comptroller on the state of Connecticut’s financial situation, but each month the Malloy administration provided misleading or false information.

Despite reports issued on November 20, 2014, December 20, 2014 and January 20, 2015, Malloy’s budget directer refused to come clean and properly identify where spending had exceeded budgeted levels.

And this week, the fiscal and political situation surrounding Connecticut’s growing budget crisis went from bad to worse.

In an article this past Monday entitled, Lembo backs Malloy’s assessment of smaller CT deficit, the CT Mirror’s Keith Phaneuf reported;

State Comptroller Kevin P. Lembo gave Gov. Dannel P. Malloy a big vote of fiscal confidence Monday, agreeing that Connecticut’s budget deficit is well below the emergency level.

The $89.4 million shortfall Lembo reported not only represents roughly half the amount that would compel Malloy to issue a deficit-mitigation plan, but also falls at least $80 million below the deficit projection of the legislature’s nonpartisan analysts.

State Comptroller Kevin Lembo based his decision on the belief that the Malloy administration could achieve the full savings from the first two rounds of emergency recessions (budget cuts) that had already been announced, but as Phaneuf noted in his article, the Malloy administration’s track record on actually achieving savings during the appropriate fiscal year is dismal.

Of even greater concern is the fact that the Malloy administration is still failing to admit that there are key budget areas where the state is dramatically overspending the amount that was actually budgeted for those activities.

As Phaneuf fully explains in his piece,

“the prospect of a deficit-mitigation plan loomed larger one week ago when the legislature’s nonpartisan Office of Fiscal Analysis pegged this year’s shortfall much larger, at $202.5 million.

Even after applying the full effects of the governor’s emergency cuts, the deficit – according to OFA – would have stood at just under $171 million.”

But Governor Malloy was, once again, allowed to duck his legal responsibility to develop a Deficit Mitigation Plan for Connecticut when the State Comptroller decided to accept the Malloy administration’s inaccurate reports about overspending, while disregarding the Office of Fiscal Analysis’ observation that Malloy would not be able to achieve all of the savings that he claimed from the first two rounds of emergency cuts.

In particular, as Phaneuf noted, “According to nonpartisan analysts, cost-overruns involving Medicaid and magnet schools are worse than the administration estimates. And a potential surplus in the debt service account is not as large as Malloy’s staff projects.”

Although Lembo’s latest action saves Malloy from having to develop a comprehensive Deficit Mitigation Plan, Lembo used his most recent report to observe that, “No one should see this as an all-clear sign…We need to continue to watch spending, to continue to watch revenue as it comes in.”

However, those remarks were hardly enough to keep Republican legislators from charging that the Democrats had circled the wagons in order to protect Malloy’s political strategy of refusing to tell the truth about Connecticut’s fiscal problems.

In a follow up story in yesterday’s CT Mirror entitled, “GOP says Lembo ignored deficit to shield Malloy,” Keith Phaneuf reported that,

“Republican legislators were surprised Monday when Lembo not only accepted the administration’s $121 million deficit projection, but also assumed the $31.6 million in emergency cuts would involve no duplication.

Lembo, who reported a deficit projection of $89.4 million, did not reject the concerns raised by legislative analysts, but noted that the administration has a strong track record of meeting savings targets built into past budgets.

But legislative analysts, who finished their review of the governor’s latest cuts, concluded they only effectively saved the state about $20 million.

More importantly, OFA said the deficit actually stands at $182.3 million. That’s $7.7 million above the level that triggers a formal gubernatorial plan to balance the books, and $92 million worse than Lembo’s estimate.”

While Malloy, Lembo and the Republicans spar over the particular numbers, one thing is absolutely clear.

In the days leading up to Election Day, Governor Malloy and his budget director consistently claimed that there was not budget deficit, that there would be no budget deficit and that the Malloy administration was not overspending on a single line-item in a nearly $18 billion General Fund Budget.

Three months later, we now know that they knew, or should have known, that the real state budget deficit had exceeded $225 million and Connecticut’s state government was careening toward a budget deficit of more than a quarter of a billion dollars….

Along with a projected budget deficit for next year in excess of $1.4 billion.

And despite this undeniable truth, Governor Malloy managed to duck his legal obligation to provide the Connecticut General Assembly and the people of Connecticut with a comprehensive Deficit Mitigation plan.

For more background on these latest issues go to Keith Phaneuf’s most recent articles at Lembo backs Malloy’s assessment of smaller CT deficit and GOP says Lembo ignored deficit to shield Malloy

Governor Dan “Transparency” Malloy announces negative news late on Friday – again

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Dannel Malloy ran on a promise that he would make Connecticut State Government “open and transparent.”

But that claim has become a joke over the past four years.

Time and time again, Malloy and his administration have released information they deem negative on Friday afternoons or leading up to holidays.

In the night before the night before Christmas, the Malloy administration announced up to 12 percent pay raises for his top aides, and even then, failed to reveal that Malloy has signed an order guaranteeing his political appointees automatic raises in the future.

Now comes the news of a second round of budget cuts that begins to address the large state budget deficit that Malloy claimed did not exist until ten days after Election Day.

In this case, as the CT Mirror reports, “Connecticut’s public colleges and universities – a frequent target of governors’ emergency cuts in the past because of the large operating grants they receive in the state budget – sustained a $6.2 million cut on Friday. And that’s after losing $6.5 million during the first round of emergency cuts Malloy ordered in mid-November.”

CT Newsjunkie highlights the latest round of cuts noting, “Second Round Budget Cuts Hits Disabled Hardest.”

The largest cut of all, “was aimed at the Department of Developmental Services, which lost $8.4 million.  And more than half those funds came from employment and other support programs for people with disabilities, or from volunteer services.”

Yup, when in doubt go after the most vulnerable people in our society.

Oh, and why drop the news late Friday afternoon?

As CT Newsjunkie noted,

“In his statement, Barnes said the administration held off on releasing the list of cuts to reporters until Friday afternoon in order to meet with a Republican legislative leader during a public, mid-day lunch.

“We waited to release this until after meeting with the Republican leadership, in anticipation of their suggestions,” Barnes said.”

You can read more at:  http://www.ctnewsjunkie.com/archives/entry/second_round_of_2015_budget_cuts_hits_disabled_hardest/  and http://ctmirror.org/2015/01/23/governors-budget-cuts-again-hit-social-services-universities-and-courts/

Just how deceitful can Malloy be on Connecticut’s budget deficit – here’s how!

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For those who want a snap-shot about how political power has corrupted Connecticut’s budget process – this is the post.  It is a lengthy article but it provides readers with an extremely important understanding of the level of deceit surrounding Connecticut’s fiscal health.

The CT Mirror’s Keith Phaneuf is the state’s leading reporter when it comes to the Connecticut State Budget.  His article in last night’s CT Mirror is entitled, “Malloy to order a 2nd round of emergency cuts as deficit swells.”  Christine Stuart, of the CT Newsjunkie, also covers the latest news in a piece entitled, “Second Round of 2015 Budget Cuts On The Way.”

As Keith Phaneuf explains;

“Gov. Dannel P. Malloy will order his second round of emergency spending cuts in two months as the current fiscal year’s budget deficit reached a new high Tuesday, approaching $121 million.

Eroding tax receipts and other revenues – first outlined in a report last week – added $39 million to a deficit that stood at $32 million on Jan. 1.

But the governor’s budget agency, the Office of Policy and Management, also disclosed Tuesday in its monthly budget report to the comptroller that “deficiencies” — likely cost overruns in various agencies — have grown by another $50 million. And most overspending, by far, involves Medicaid.”

So, immediately after the election, the Malloy administration announced that a state budget deficit of approximately $100 million had suddenly appeared.  In response to the news, Governor Malloy identified well in excess of $50 million in cuts to various programs.

Now, a month later, and despite those cuts, Connecticut’s budget deficit has jumped to over $120 million.

In order to fully understand the scheme that was instituted by Governor Malloy and his operation, you must carefully follow the bouncing ball…

Connecticut State Law (Section 4-85 of the Connecticut State Statutes) requires that if the State Budget Deficit exceeds one percent of the appropriated budget, the Governor MUST submit a deficit-mitigation plan to the Connecticut General Assembly.  Any proposed cuts in excess of what the Governor is allowed to implement on his own (that is cuts in excess of three per cent of the total appropriation from any fund or more than five per cent of any individual line-item appropriation) requires the approval of the General Assembly.

In order to ensure that there is some degree of honest oversight, it is the State Comptroller and NOT the Governor or the Office of Policy and Management who has the legal duty to determine if a shortfall exists and whether it is in excess of one percent of the general fund appropriation.

To facilitate the Comptroller’s responsibilities, on the 20th of each month, the Secretary of the Office of Policy and Management (Ben Barnes) provides the State Comptroller (Kevin Lembo) with a letter summarizing all the issues related to state revenue and expenditures.  The OPM Secretary has the legal obligation to accurately report whether state revenues are up or down from the previous month and whether any state agency is over-spending its budget allotment.

The Comptroller has his own budget experts and both OPM and the Comptroller are also supposed to look at the information provided by the non-partisan Office of Fiscal Analysis to guide their assessments.

Throughout the recent gubernatorial campaign, Governor Malloy constantly and consistently declared that there was no state deficit, nor would there be a state deficit this year (or next year).

Two weeks before Election Day, OPM Secretary Barnes issued his mandatory monthly letter (October 20, 2014) informing State Comptroller Lembo that revenues where on track and that no state agency was spending or would be spending more than their budget.

Although Lembo used his “Letter of the First” to warn about the problems that lay ahead, he certified on November 1, 2014 – five days before the Election – that there was no state budget deficit.

However, the notion that in a General Fund Budget of $17.5 billion, every single line-item was perfect and there would be no overspending in any area was beyond absurd.  Traditionally state budget overspending is in the range of $100-$200 million or more.

But with Election Day approaching, Malloy and his operatives stuck by their claim that there was absolutely no state deficit.

However, on October 31, 2014 Keith Phaneuf reported, “Nonpartisan analysts tracking $84M in potential cost overruns in state budget.”

Phaneuf wrote, “Gov. Dannel P. Malloy’s administration isn’t projecting any troubles for the current state budget, but the legislature’s nonpartisan analysts have identified almost $84 million in potential problems. The Office of Fiscal Analysis reported “deficiencies” or potential cost-overruns in five areas. Nearly half of the deficiencies, about $40 million, are in the Department of Social Services. Another $27 million involve health care for state employees and retirees. Comptroller Kevin Lembo warned last May that a shortfall in this area was likely because of a projected surge in retirements among state prison guards.”

But with Election Day so close, and the election hanging in the balance, Malloy and his campaign utterly rejected the notion that the non-partisan Office of Fiscal Analysis was correct and they were wrong.

But day’s after Malloy won re-election, the Malloy administration began to divulge the truth.

Eight days after Election Day, Phaneuf reported, “Malloy to order emergency cuts, restrict hires to counter impending deficit” writing,

“To reverse an impending state budget deficit, Gov. Dannel P. Malloy’s administration has told agencies it will order emergency spending cuts and freeze all-but-critical hiring…In a memo sent late Wednesday to all agency heads, the governor’s budget director, Office of Policy and Management Secretary Benjamin Barnes also reinforced existing caps on overtime work.”

Nine days after Election Day, Phaneuf reported, “It’s official: CT’s budget is $89 million to $100 million in the red,”adding,

“The state budget received its first official deficit reports Friday when nonpartisan legislative analysts and Gov. Dannel P. Malloy’s administration projected shortfalls ranging from $89 million to just under $100 million.

“And while the administration issued the larger of the two deficit forecasts — $99.5 million — budget director Benjamin Barnes, insisted it quickly would be closed, and reasserted Malloy’s insistence that tax hikes are not an option.

“This is consistent with what the administration has been saying,” Barnes said, “that no matter what the projections are, we will manage and administer the budget so that there will be no deficit. It is important to remember that this is a prediction of what would happen now and in the future should we do nothing — and doing nothing is not an option.”

The whole situation revealed the grim political gamesmanship in which Malloy and his advisers were engaged.

Before Election Day – On October 20, 2014 – the Malloy administration’s official letter to Comptroller Lembo said there was no state deficit.

After the election – On November 20, 2014 – the Malloy administration’s official letter to Comptroller Lembo admitted that there was a $100 million state deficit.

And the deceit continued…

On December 20, 2014 OPM Secretary Barnes bragged that the $70 million in cuts instituted by the Malloy administration meant that the State deficit was down below $40 million.  According to Keith Phaneuf’s report at the time, “Malloy’s budget chief, Benjamin Barnes, also warned in his last forecast on Dec. 20 that no major growth in state revenues was anticipated at this time. But Barnes also did not project any decline in the state tax revenues and, equally important, Barnes did not identify any additional areas of overspending.

And yet thirty days later – On January 20, 2014 – comes the “stunning” news that revenue has declined and “new” areas of overspending have suddenly been identified.

Now the Malloy’s administration suddenly admits the state deficit has jumped from less than $40 million to almost $121 million, despite the $70 million in cuts – because state revenue is actually down an additional $39 million and state agencies have spent $50  million more than authorized (mostly in the area of Medicaid).

Before the Election – no state deficit.

Within sixty days after the election – that overall problem has grown by nearly $200 million.

The fact is that every state agency has professional staff monitoring their budget on a daily basis.

The Office of Policy and Management has an entire office of professional staff monitoring the state budget.

It is beyond inconceivable that Governor Malloy and his team suddenly discovered the sudden decline in revenue and yet another significant and growing problem with overspending.

But instead of telling the truth, Governor Malloy, his administration and his campaign decided that their best strategy was to lie about the existence of the state deficit and the magnitude of that deficit.

Was their rationale due exclusively to the fact that they wanted to make it seem like Governor Malloy was a good fiscal administrator?

No, the real issue is more complex.

Recall that this blog post begins with the statement,

Connecticut State Law (Section 4-85 of the Connecticut State Statutes) requires that if the State Budget Deficit exceeds 1% of the appropriated budget, the Governor MUST submit a deficit-mitigation plan to the Connecticut General Assembly.  Any proposed cuts in excess of what the Governor is allowed to implement on his own (that is cuts in excess of three per cent of the total appropriation from any fund or more than five per cent of any individual line-item appropriation) requires the approval of the General Assembly.

The fundamental problem facing Governor Malloy and his political spin operation was more than simply the truth that a state deficit existed.

The problem was that if they had told the truth – the whole truth – it would have been clear that the size of the budget deficit was greater than $170 million and that put it in excess of the one percent trigger that would have, in turn, required Malloy to develop a public Deficit Mitigation Plan laying out where all the cuts would be taken to eliminate the entire deficit.

While Malloy was proclaiming that if he was re-elected, there would be no tax increases, no cuts in vital programs and no need to approach the state employee unions about concessions, the last thing Malloy and his political team could afford was not only revealing that there was a deficit, but actually detailing where the cuts would take place.

The key constituencies that Malloy needed to win are those that are most likely to be alienated by the type of cuts Malloy was going to implement to balance the budget.

Keeping the fact that there was a state deficit secret was important to Malloy’s campaign strategy, but even more importantly, the Malloy campaign needed to make sure that under no circumstance did anyone discover that the projected deficit actually exceeded one percent of the general fund.

Had that been known, Malloy would have to have laid out an entire plan – a plan that would have been seen as devastating to the very people Malloy needed to win, so it was necessary to stay silent in order to trick them into casting their vote for him.

For that very reason, even when the news of the deficit started to be released (safely after the election), Malloy had to ensure that that it was revealed slowly… in phases… so that it never exceeded that $170 million trigger.

First came the news of a $100 million deficit, which he claimed he “knocked” down with a round of cuts.

Now comes the news of a larger deficit…which he says will bring along a second round of cuts

But holding the news until after the election, and then manipulating when the truth was revealed, Malloy not only made it through Election Day, but has managed to avoid having to produce the required Deficit Mitigation Plan altogether.

Next month Malloy will be announcing his proposed budget for Fiscal Years 2016-2017, but right now he is doing the “happy dance,” knowing that he successfully manipulated the law, and thus was able to trick the people of Connecticut … BOTH BEFORE AND AFTER ELECTION DAY.

And that is why these past two months are a case study about how political power has corrupted Connecticut’s budget process.

OMG!  You mean Connecticut really does face a budget crisis?

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Keith Phaneuf’s lead article in yesterday’s CT Mirror reads, “Malloy doesn’t get predicted revenue boost, big deficits remain.”

The news…

“A new analysts’ report Thursday found tax receipts and other revenues still likely to grow as originally anticipated last summer – when major deficits were projected for the next two fiscal years.

That means the governor — who has called those earlier estimates “extremely conservative” – still must close shortfalls topping $1.3 billion next fiscal year and $1.4 billion in 2016-17. Malloy, whose budget plan is due to legislators on Feb. 18, repeatedly has ruled out tax hikes.”

A political campaign dedicated to lying to Connecticut’s voters is in the past, and with the release of the “Consensus Revenue estimates,” Malloy’s Budget Director, Ben Barnes, announced “The revenue estimates for the biennium will be the basis for the Governor’s budget proposal.”

So despite a year of constantly denying the very real looming deficit, the Malloy administration finally admits that the dire “predictions” produced by the Independent Office of Fiscal Analysis are true.

Throughout his re-election campaign, Malloy claimed that not only would tax receipts grow by about seven percent during the next two years, but as the CT Mirror recalls, “Connecticut could expect more, according to the governor. And the revenue from that extra growth would make the deficit relatively easy to manage, provided municipal aid was kept flat and agencies did not receive inflationary spending increases.”

Is the news a surprising development?  Hardly…

Here are just a handful of the budget related posts on Wait, What? over the past year;

10-24-14: Can we have a little honesty about Connecticut’s state budget problems?

No, because – That’s not how it works! That’s not how any of this works!  

Rather than honestly confront the projected $1.4 billion budget deficit in next year’s state budget and the shortfall of more than $4.8 billion over the next three years, the two major party candidates for governor have decided to simply lie their way to Election Day in the hopes that voters will not discover the magnitude of the fiscal problems Connecticut will face over the next few years.

10-1-14: Forgive them, for they know not what they do – Not!

Both Malloy and Foley say that, if elected, they will not raise taxes, not cut vital services not reduce the state workforce and will not need to negotiate contract changes with state employees.

The notion that such campaign promises could be met is not only laughable but it is a sad commentary on how far from the truth Connecticut’s gubernatorial candidates will stray in their ongoing efforts to get elected.

8-13-14: State Deficit?  What State Deficit?”

In a recent interview with the CT Mirror, Governor Dannel “Dan” Malloy said,

“We really don’t have a deficit.”

However, if the truth be told, according to the non-partisan Office of Fiscal Analysis, the State of Connecticut continues to face a monumental fiscal crisis.  In fact, here are the projections from the experts for the fiscal years following this November’s election;

Fiscal Year 2016:  A $1.4 billion Connecticut state budget deficit

Fiscal Year 2017:  A $1.6 billion Connecticut state budget deficit

Fiscal Year 2018:  A $1.8 billion Connecticut state budget deficit

Malloy says the Office of Fiscal Analysis is wrong, although he uses their numbers when he complains that he inherited a $3.7 billion state budget deficit from former Governor Rell.

[…]

Meanwhile, the cornerstone of Malloy’s campaign is his claim that he won’t propose or accept any tax increases during the next four years, he won’t need to renege on his deal with the state employee unions nor will he have to ask for further concessions from state employees and he won’t cut vital services here in Connecticut.

8-5-14 All is well in the Land of Oz

“We really don’t have a deficit…I know that’s hard to believe.” (Dan Malloy)

Malloy tells the CT Mirror;

  • Connecticut doesn’t have a deficit
  • There will be no cuts to key services
  • There is no need to discuss concessions with state employees
  • He will not propose or accept any tax increase during his four years as governor – even to shift the tax burden by making the wealthy pay their fair share so Connecticut can reduce the disproportionate pressure on the middle class.

And how is Malloy going to achieve this incredible feat of having more services, no additional taxes and no deficits? As the CT Mirror explains, 

“The governor said he’s confident that both the nation’s and Connecticut’s economy are on the cusp of a major surge.”

7-14-14:  Connecticut deserves a government that will tell its citizens the truth

As the CT Mirror explains in the series on where the candidates stand of the state budget, Pelto: State budget deficit reveals a broken fiscal system; 

“Former state Rep. Jonathan Pelto doesn’t have any trouble standing out from the rest of the 2014 gubernatorial candidates. For Pelto, a $1.4 billion shortfall – more than four years after the last recession ended – typifies a broken fiscal system that threatens Connecticut’s schools, state workers’ pensions, and middle class families.”

6-6-14:  Look there goes a flying pig!

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.

5-6-14:  Malloy’s “NO TAX” pledge will send Connecticut into the abyss

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.

4-30-14:  Post-election state budget deficit projected to be an incredible $1.4 billion

As Wait, What? readers have been reading for months, the Malloy administration has been painting a rosy picture of Connecticut’s state budget situation thanks to the unparalleled use of budget gimmicks and inflated revenue estimates.

Readers have been repeatedly informed that Malloy’s irresponsible approach to budgeting would leave Connecticut with a $1 billion state budget deficit in each of the three years following the November election.

Based on the latest revenue projects, yesterday’s Wait, What? post increased that projected budget deficit to at least $1.2 billion and this afternoon, the Malloy administration, along with the General Assembly’s Office of Fiscal Analysis, announced that the person who is elected to be governor in November will face a budget deficit of close to “$1.4 billion or 7.4 percent of annual operating costs.”

And the list of articles warning about the fiscal realities facing the state goes on and on and on.

Whether you read Keith Phaneuf’s pieces in the CT Mirror or the news analysis and commentary pieces here at Wait, What?, the message has been the same….Governor Malloy and his administration have been lying to the votes of Connecticut.

And now, months after the campaign is over and just weeks before Malloy presents his 2015 state budget proposal, the governor’s budget office finally admits – Connecticut is facing a budget crisis well in excess of $1 billion.

Go Figure…

Re-post – Is it Malloy’s greatest “Wait, What?” Moment?

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Re-posting for Monday Readers;

As Governor Malloy and his administration prepare to roll-out his new “Transportation Initiative,” the Governor’s press office issued a press release Friday (January 9, 2015) to proclaim that the Governor will soon be proposing legislation to amend the Connecticut State Constitution in order to, “ensure revenues earmarked for transportation cannot be diverted for other purposes.”

Although the process to change Connecticut’s State Constitution takes two years or more, Malloy said, in his prepared statement, “We must make sure every penny we raise for transportation goes toward our vision to transform Connecticut – now and in the future,”

This incredible “Wait, What?” statement comes from the same individual who has consistently worked to balance Connecticut’s State Budget by raiding various funds and transferring money from dedicated accounts to the State’s General Fund.

But Governor Malloy now says that he is committed to ensuring that the money collected for a particular purpose will actually be spent on that purpose…

For starters, one might ask, on behalf of Connecticut’s state employees, why Governor Malloy still hasn’t created the “Health Care Trust-Fund Lock Box” that he promised to do as part of the 2011 SEBAC state employee concession agreement.

The SEBAC concession agreement provided that all state employees give up 3% of their pay to help fund future state employee retirement health care premiums.  At this point, the program is generating about $120 million dollars a year, but the money isn’t even being put aside in a special “Lock Box” fund and invested for long term growth, as Malloy promised.

The State employees have fulfilled their end of the bargain, and although the State doesn’t start matching those contributions until 2017, the SEBAC agreement required that the funds collected are to be deposited into a special “Trust Fund.”

Yet to date, the Malloy administration hasn’t even taken that necessary step….

And now Malloy is proposing a Constitutional Amendment to protect future transportation revenue?

The political maneuver is nothing short of laughable.

What follows is just A PARTIAL LIST of the budget transfers Malloy and his administration has used over the past four years to make the state budget appear balanced;

  • Transferred $2.2 million from the Boating Fund to the General Fund, eliminated the boating account and required all future revenue from watercraft registration and numbering fees to be deposited in the General Fund.
  • Transferred $600,000 from the Transportation Strategy Board in the Department of Transportation to the General Fund.
  • Transferred $7.5 million from the Regional Performance Incentive Account to the General Fund
  • Transferred $1.2 million from the Banking Fund to the General Fund
  • Transferred $450,000 from Workers Compensation Administration Fund to the General Fund
  • Transferred $2.3 million from Consumer Counsel and Public Utility Fund to the General Fund
  • Transferred $500,000 from Insurance Fund to the General Fund
  • Transferred $4. 7 million from the School Bus Safety Belt Account to the General Fund
  • Transferred all revenue from fines, civil penalties, or restitution for violating banking law from the Banking Fund to the General Fund
  • Transferred multiple PROBATE COURT ADMINISTRATION FUND “surpluses” to various non-probate programs and the remaining to the General Fund
  • Transferred $3. 6 million from the Public, Education, Government Programming and Education Technology Investment Account to the General Fund
  • Transferred $2 million from the Biomedical Research Trust Fund to the General Fund
  • Transferred $2 million from the Community Investment Account to the General Fund
  • Transferred $2 million from various accounts within the Office of Policy and Management to the Litigation/Settlement account
  • Eliminated the Municipal Revenue Sharing Account Malloy created in his 2011 tax package to aid cities and towns, “saving” the General Fund nearly $100 million a year
  • Transferred $35 million from the Connecticut Resources Recovery Authority (CRRA) to the General Fund
  • Transferred and additional 6.9 million from the Public Education and Governmental Programming Account to the General Fund
  • Transferred an additional $11 million from the Banking Fund to the General Fund
  • Transferred $5 million from the Regional Greenhouse Gas Initiative (RGGI) to the General Fund
  • Transferred $30.4 million from the Clean Energy Finance and Investment Authority (CEFIA) to the General Fund
  • Transferred $10 million from the Municipal Video Competitiveness Account to the General Fund
  • Transferred $10 million annually (for 10 years) from the Tobacco Settlement Fund to the “smart start” preschool program so the $100 million would not need to come out of the General Fund
  • Transferred $10 million from the Tobacco Master Settlement Agreement (MSA) to the General Fund
  • Eliminated $20 million statutory transfer from the Tobacco Settlement Fund to the Stem Cell Research Fund, thereby keeping the money available for the General Fund
  • Transferred and additional $1 million from the Probate Fund to the General Fund
  • Transferred an additional $4 million from the Tobacco Settlement Fund to the General Fund
  • Transferred $15 million from the Connecticut Student Loan Foundation to pay for one-time expenses of the Connecticut State Universities and Community Colleges

And that doesn’t even cover some of the other “fund transfers” that Malloy made.

And when it comes to actually supporting transportation, Malloy’s first term in office was marked by failing grades.

At a campaign stop last fall, Malloy told a special forum on transportation,

“This stuff is a passion to me,” and he added, “This administration is committed to build out the infrastructure of this state.”

But as a special CT Mirror investigative series in September 2014 pointed out, Malloy’s record on transportation is anything but impressive.

[For the details read Keith Phaneuf’s pieces in the CT Mirror – BUDGET CHOICES, FISCAL MANEUVERS UNDERMINE TRANSPORTATION FUNDING  IMPROVING TRANSPORTATION IN CONNECTICUT: A DECADE OF SLOW GOING, A ROUGH ROAD AHEAD FOR TRANSPORTATION IMPROVEMENTS.]

While Malloy said he had made transportation a priority and would do even more in a second term, the CT Mirror revealed;

  • Nearly $3.5 billion in financing for transportation projects has been approved — but the funds actually haven’t been borrowed and spent.
  • And as a result of the Malloy administration’s decision not to refill many important positions, the State Department of Transportation has almost 150 fewer engineers and employees than when Malloy took office, making it impossible to get a large number of projects underway.

And while Malloy may not have raided the Transportation Fund as much as former Governor Rell had done, he still siphoned off money that was supposed to be earmarked for improving Connecticut’s transportation system.

The actual level of state spending on transportation in FY14 was $91 million less had been approved by the legislature and this year’s budget diverted another $20 million.

The Transportation Fund is supposed to get most of its dollars from Connecticut’s 25-cent-per-gallon retail tax and the state’s wholesale fuel tax.  However, despite four tax increases in the wholesale fuel tax which increased Connecticut’s revenues by 40 percent since 2005, Governors Rell and Malloy have used nearly $1.4 billion on non-transportation programs.

And now Governor Malloy is saying that Connecticut should adopt a Constitutional Amendment so that taxpayers can be sure that revenue for transportation programs are actually spent on transportation programs????

Yeah, this could very well be Governor Dannel Malloy’s greatest “Wait, What?” moment (to date.)

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