Could Connecticut’s state deficit really jump from $60m to $365m in a month? That would be a No

According to Connecticut law, by the twentieth day of each month, the Governor’s Office of Policy and Management must provide the Office of the State Comptroller with a statement of “revenues and expenditures for the General Fund.”

Using this information, and his own budget experts, the State Comptroller then produces the state’s official financial statement that is released on the first of each month.

A couple of weeks before the election, OPM reported that the projected deficit was $60 million.

A couple of weeks after the election, OPM reported that the projected deficit was $365 million.

As to the question of whether a state deficit could leap from $60 million to $365 million in thirty days, the answer is a simple and resounding – “No.”

So what is going on?

On October 19, 2012, Ben Barnes, Governor Malloy’s budget chief, wrote to State Comptroller Kevin Lembo to report, “We are projecting the General Fund will experience…a $60.1 million shortfall on a budgetary basis, a change of $33.2 million from last month.”

Now, thirty days later, OPM Secretary Barnes, in his monthly letter to State Comptroller Kevin Lembo, is observing that the projected budget deficit is actually six times larger than he had projected, only a month ago.

Now Barnes is reporting that state revenues are down ANOTHER $144.9 million, including $100 million in “unexpected refunds” of income and corporation taxes.   OPM lowered the amount the state is expected to collect from the corporation tax by $51.8 million and the amount that will come in from the state sales tax by $43.7 million.

Even more enlightening is that whereas OPM alluded to the fact that it will probably spend $100 million more than expected on health care costs for poor, Medicaid recipients, the letter Barnes sent to Lembo yesterday reports that the Malloy Administration will spend at least $294.1 million MORE than the amount allocated in the state budget that was passed by the Legislature and signed into law by the Governor.

The number is at least $160 million more than OPM projected last month.

Tens of millions of dollars in excess spending is related to costs in non-Medicaid spending, including cost over-runs in the Department of Corrections, the Department of Emergency Services and Public Protection and in other state agencies.

It would appear that some of these higher costs are related to excess personnel costs meaning that Malloy Administration knew for quite some time that payroll costs were going to exceed what had been budgeted for those agencies.

Last week, Governor Malloy and his advisers sought to dismiss any criticism by suggesting that State Representative Larry Cafero, the Republican leader in the House of Representatives, was merely trying to score political points by criticizing the Administration’s handling of the budget.

However, Malloy and some in the media, who simply run with that story, are doing a tremendous disservice to the truth.

While Cafero may very well be attempting to score political points, after all, he is a politician and the political leader of the opposition party; the issues he is raising are legitimate.

In fact, if the tables were turned and it was a Republican Governor announcing massive budget deficits, the Democrats would be calling for legislative hearings and some would even be suggesting that Administration Officials be called to testify, under-oath, so that the Legislature could determine who was involved in the effort to cover-up the magnitude of the budget problems leading up to the election.

The budget analysts who work for the Office of Policy and Management, the State Comptroller and the Office of Fiscal Analysis are some of the most talented people in their field.  There is absolutely no question that some of these experts understood the magnitude of the budget problem.

The unanswered question is not whether the professional staff within state government understood that the budget crisis was getting worse, but why those in more political positions chose to withhold the information from the public.

CT Newsjunkie has the latest at: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/barnes_confirms_365m_deficit/ or you can read OPM Secretary Barnes’ letter to State Comptroller Kevin Lembo at http://www.ct.gov/opm/lib/opm/budget/comptrollerletter/fy2013/2012nov20comptrollersletter.pdf

“This is not a deficit…It’s a shortfall” – Governor Malloy 11-15-2012

No, this is not a segment on the Daily Show, although it is certainly worthy of what Jon Stewart and his team of award winning writers come up with.

Let’s take a step back, a deep breath and try this again…

What we do know is that Connecticut is facing a “fiscal problem.”

The Governor proposed, the Legislature passed and the Governor signed a state budget into law.

Now, state revenue is coming in below what was projected.

And state expenditures are higher than what was projected.

Those two developments create a problem.  For now let’s call the problem a “gap.”

On November 1, 2012 the Malloy Administration said the gap was $60 million dollars.

In the days after the election, the Malloy Administration said the gap was actually bigger than $60 million.

At first they said that revenue had dropped by about $52 million from a report that was released last April.  However, the state budget that passed and was signed into law wasn’t based on the report that they were referencing, but instead, it was based on the amount of revenue in the report plus an additional $75 million in revenue.

So while revenue was $52 million below the April Report, it was actually $128 million below the budget.

But before people get too confused about the $52 million versus the $128 million, they can rest assured that neither number was an accurate description of the size of the gap.

That is because the real gap, at the time, was over $300 million.

To make a long story shorter, the Malloy Administration then admitted that this year’s real gap was $365 million.

And then, the next day, they admitted that the gap was $365 million for this year and $1.1 billion for next year.

Perhaps most impressive is that fact that all of this occurred between November 1 and November 15, which, by the way, is sometimes called a fortnight.

And then Governor Malloy spoke to the media, and as report in various media, including the Hartford Courant, we learned that, “Malloy refused to use the word “deficit” and instead said the current situation is a “shortfall.”

The Courant story added, “’This is not a deficit,’ Malloy told reporters Thursday at the state Capitol. ‘It’s a shortfall.’”

Now some, including House Republican leader Larry Cafero, have been speaking out about these developments.

Cafero told the Courant and others, “For the governor to come out with a press release using the figure $52 million is wrong. At worst, it’s deceiving and deceitful. Where does he get $52 million when the report itself says $128 million?”

Representative Cafero went on to tell reporters, “For the governor to put out a press release on $52 million is the least transparent, most deceitful thing I’ve seen…”

When asked about the accuracy of Mr. Cafero’s comments, Governor Malloy responded…

“He’s wrong. Representative Cafero has expressed his desire to become governor of the state of Connecticut. You folks are going to have to get used to putting everything in context, and I’m sure that that will appear in your papers every time you report what he has to say. Having said that, he’s wrong. I don’t know how else to say it.  The data is the data.  The data becomes available when it’s available.”

While we are discussing semantics, we should probably add that the Connecticut Constitution and state laws require that the state go out and borrow the funds necessary should it end the fiscal year in the red, often referred to as a deficit.

So if we want to be really technical, Connecticut can have a projected deficit but it can’t have a real deficit because a real deficit would mean that the State ended the year in the red, which would trigger the state going out to borrow money to fund that shortfall, which means there would no longer be a gap, shortfall or deficit.

I’m not sure if that strengthens or weakens the positions taken by Governor Malloy and Representative Cafero, but I’d hate to see us squander much more time talking about whether the gap is really a deficit or a shortfall.

Finally, as to Governor Malloy’s observation that ” The data becomes available when it’s available,” considering I’m not trained in quantum physics, I simply don’t feel qualified to comment on his observation.

Malloy’s budget chief admits to $365 million state budget deficit

You are reading that correctly – despite the Governor denying this reality 48 hours ago, Secretary of the Office of Policy and Management, Ben Barnes, is addressing a legislative committee today and will admit that the state budget deficit is at least $365 million dollars.

In the days leading up to the election, the Malloy Administration stuck to their claim that the state budget deficit was $60 million.

Just three days after the election, the number they’d admit too increased by another $50 million.

But as Keith Phaneuf wrote in the CTMirror, and as was reported here at Wait, What?, the true deficit was at least $300 to $350 million.

A state budget of $365 million is, as Phaneuf writes, “nearly double the level needed to compel Gov. Dannel P. Malloy to prepare a deficit-mitigation plan, according to written testimony from Malloy’s budget chief.”

Barnes’ told the Legislature that, “All told, these changes result in a projected deficit of $365 million.”

Barnes was silent on why the Malloy administration provided State Comptroller Kevin Lembo with different, and inappropriately more rosy numbers just days ago.

Check back tomorrow for some more information about the budget deficit and why the Malloy Administration might have worked so hard to keep the magnitude of the problem secret for as long as they could…

The CT Mirror, CTNewsjunkie and other media outlets have updated stories on the budget deficit.  You can find the latest details about the ugly budget situation at the CTMirror  http://www.ctmirror.org/story/18201/malloys-budget-chief-confirms-365m-deficit-testimony-legislature and at CTNewsjunkie: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/deficit_hits_365m/