Look-Out – He’s got our credit card and he is going nuts!

6 Comments

At last week’s State Bond Commission meeting Governor Dannel Malloy responded to a question by admitting that that his administration was informing Wall Street analysts that Connecticut would be dramatically increasing the use of the state’s credit card this year.

The CT Mirror’s story about the stunning announcement was entitled, “Malloy to Wall Street: Expect state borrowing to jump 40 percent this year.” 

There wasn’t a lot of other media coverage about the statement despite the fact that it is probably the single most important thing that Governor Malloy has said since he falsely claimed, during last year’s gubernatorial campaign, that there was no state budget deficit this year and that he would be able to solve next year’s projected $1.4 billion budget deficit without raising taxes or cutting vital services.

  • Recall that with less than a week to go before Election Day 2014, Malloy said the state was enjoying a budget surplus, although we now know that this year’s budget deficit has added up to over a quarter of a billion dollars and continues to get worse.
  • And as to his “Read My Lips” promise of no new taxes and no cuts to critical programs, the proposed budget that Malloy announced in February included $900 million in additional tax revenue, shifting about $300 million in existing spending onto the state credit card, along with a series of devastating and irresponsible cuts to essential state services.

But forgetting that Malloy didn’t tell the truth about the status of this year’s state budget deficit while misleading voters by promising to do the impossible when it comes to next year’s budget, the latest news that he plans to put another $2.4 billion onto the state credit card this year should be front page, top of the fold, large font headline news in every media outlet in the state.

Although the amount of state debt already makes Connecticut one of the worst states in the nation when it comes to how much debt our taxpayers must pay back over the next two decades, we now have a governor who increased the amount of annual borrowing from about $1.4 billion to $1.8 billion a year in his first term and has now announced that he is planning to borrow forty percent more this year.

As Keith Phaneuf explained in his CT Mirror article last week,

“Malloy notified the State Bond Commission on Tuesday that he increased what is commonly referred to as the “soft bond cap” from $1.8 billion to $2.5 billion for the 2015 calendar year.

That’s up almost 40 percent from last year, and almost 80 percent from 2012, when Malloy had set the cap at $1.4 billion.”

In an attempt to explain why the state would borrow such an excessive amount this year, Malloy told reporters,

“[M]oney continues to be relatively cheap and that can’t be guaranteed to last forever…Let’s try to capitalize on getting the cheapest possible money that we can when we have that opportunity.”

To put that statement into perspective, imagine calling a family meeting and telling your spouse and kids,

“Hey everyone, we just got a credit card in the mail with a low interest rate so you should all go out and buy all the things you want because we don’t know how long we’ll have access to low rates like these…and then when your youngest asks, but dad, how will we pay for the high monthly minimum payments that will be due each month for the next twenty to thirty years, you pat him or her on the head and say, I’m impressed you understand that point but don’t worry about it, we’ll cross that bridge when we get to it.”

In response to Malloy’s breathtakingly irresponsible announcement, the General Assembly’s Republican leaders on the Finance, Revenue and Bonding Committee pointed out not only does Connecticut rank as one of the most indebted states — per capita — in the nation, but observed that, “During these tough fiscal times we should be reining in borrowing.”

Of course, after their political shot at Malloy and the Democrats, the Republicans on the Bond Commission then voted for all the new bonding that was on the agenda for this month.

It should be noted that Malloy’s obsession with excessive borrowing is hardly new.

As the CT Mirror’s story notes,

“In the last two years leading up to the 2014 gubernatorial election — which Malloy won by defeating Greenwich Republican Tom Foley — the governor and the legislature’s Democratic majority also moved hundreds of millions of dollars of operating expenses onto the credit card to avoid pre-election tax hikes.

These steps included:

  • Refinancing debt to push $392 million in payments owed then until after the election.

  • Bonding $173 million in new municipal aid.

  • Bonding $57 million for pollution abatement and stem cell research grants that previously were paid for out of the operating budget.

  • Borrowing an extra $39 million so that debt payments tied to converting state finances to Generally Accepted Accounting Principles could be deferred until after the election.

And finally, as if to prove just how out of touch all of Connecticut’s leaders are on the issue of the growing burden they are placing on Connecticut’s taxpayers by borrowing more and more money, the CT Mirror story concludes with,

“Malloy spokesman Devon Puglia countered Wednesday that Republican lawmakers are not critical of state borrowing whenever the funds support projects in their home districts.

“I’ve never seen such hypocrisy out of the GOP,” Puglia said. “It’s unbelievable.”

Both Frantz and Davis [The Republican’s two top leaders on the General Assembly’s Finance Committee] serve on the bond commission and have voted to approve financing for various projects in their communities, or in those of their colleagues…”

Great, just great….

Rather than address the real problem, the Democrats and Republicans spend their time hurling insults at each other while they all just keep using the state’s credit card knowing that it is Connecticut’s residents who will end up having to pay off the enormous cost of the principal and interest they are racking up.

CT Capitol Report Headline Reads – The Oracle: Pelto: Told you so…

3 Comments

While some tend to fall back on the phrase, “I told you so” much too often, the truth is that rarely does one get a chance to point to someone else confirming an individual’s claim that that they really were right when others were wrong….

So with that as the backdrop and propelled by an opportunity to brag, tempered by an appropriate dose of humility, I am proud to report that ctcapitolreport, the state’s leading news aggregation website, is sporting a headline that reads – The Oracle: Pelto: Told you so…

The reference is to my long-standing and on-going observation that in order to balance next year’s Connecticut state budget, provide sufficient revenue to fund critical services and begin to reduce the unfair tax burden on Connecticut’s middle class, Connecticut’s elected officials must find the courage to actually do what is necessary and that means appending Connecticut’s tax code to require that the state’s wealthy begin to pay their fair share of taxes.

Longer term Wait, What? readers will recall that this blog does cover issues other than the unfair, inappropriate and discriminatory Common Core Smarter Balanced Assessment Consortium (SBAC) Testing Scheme.

In fact, another primary focus of this blog has traditionally been Connecticut’s irresponsible fiscal policies that have resulted in a truly regressive tax system in which the state’s lowest income families pay about 12 percent of their income in state and local taxes, the middle class pay about 10 percent of their income in state and local taxes and the wealthy, who have been coddled by both Democrats and Republicans, only pay about 5 to 6 percent of their income in state and local taxes.

While the inequities in Connecticut’s tax system have been growing for decades, the problem has become particularly severe as a result of Governor Dannel Malloy’s unending fiscal gimmicks and his unprecedented dedication and addiction to irresponsible fiscal policies.

The article the website www.ctcapitolreport.com  is referring to is a news story posted early today by Connecticut’s premier budget reporter, Keith Phaneuf of the CTMirror.

Phaneuf has written another MUST READ story for those who want to understand Connecticut’s state budget and how Governor Dannel Malloy lied his way through the 2014 gubernatorial campaign by claiming there was no state deficit and that if he was re-elected we would eliminate the projected $1.4 billion projected deficit for next year without having to raise taxes or cut services.

Keith Phaneuf’s latest article is entitled “Tax hike ideas abound at the Capitol,” and can be found at: http://ctmirror.org/2015/03/23/tax-hike-ideas-abound-at-the-capitol/

The CT Mirror piece concludes with the following;

Former state Rep. Jonathan Pelto, D-Mansfield, who tried unsuccessfully to petition onto the 2014 gubernatorial ballot, predicted last summer that the big budget deficits projected for the next two fiscal years would eventually force a progressive income tax debate this spring.

“Requiring the wealthy to pay their fair in state income tax is the only responsible way to balance the state budget and begin to reduce the heavy and inappropriate burden on Connecticut’s middle-income taxpayers,” Pelto said last week. “Failure to require the rich to pay their fair share will mean unacceptable cuts in vital services and hurting the middle class and all working families by shifting even more of the tax burden onto local property taxpayers.

Or, in other words, “I told you so.”

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

1 Comment

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

3 Comments

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

8 Comments

[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

13 Comments

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

10 Comments

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

3 Comments

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

3 Comments

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!

8 Comments

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.

Older Entries