Gov. Dannel P. Malloy laid out a more detailed framework Tuesday for how he’s approaching the state’s budget deficit. He’s already said he can’t do it with just spending cuts or just tax increases, but he tipped his hand by saying he’s looking for close to $2 billion in spending cuts.
Malloy’s budget isn’t due until Feb. 16, but up until today he’s remained fairly vague about how he plans on closing a $3.67 billion budget deficit.
At a meeting of more than 50 various state agency heads, Malloy announced he plans on spending no more than this year’s current services budget, which is about $17.95 billion. That means Malloy is working on cutting $1.88 billion in programmatic increases built into last year’s budget.
But for those who follow budget politics, it may not be news since Malloy was always aware he would have to cut about $1.5 billion in order to stay under the statutory spending cap. The spending cap, which was put in place in 1991 the same year the income tax was first implemented, caps the amount of spending the state can do based on the amount of revenue it receives.
“What I’m trying to do is move the state into a position where it can compete with other states and into a position where we’re sustainable,“ Malloy said.
Cutting $1.88 billion in spending is his best estimate at the moment of what the state needs to cut in order to live within its means, he said.
Malloy also said he will not be going to the bond market to borrow money for salaries and operating expenses, and he will fund the states pension liabilities.
Last year, then-Gov. M. Jodi Rell and the coalition of state labor unions agreed to delay about $350 million in pension obligations in an effort to balance the state budget. But Malloy sees that as a budget gimmick he won’t use.
Thirdly, Malloy said there will be no early retirement incentive program offered to state employees. Click here to read more about that.
The severity of the spending cuts could put Malloy at odds with lawmakers in his own party, but Sen. President Donald Williams said Tuesday that he doesn’t think that’s true.
He said when the national economic crisis started lawmakers were able to find $3 billion in spending cuts. Two years later, without a meaningful recovery, Williams said he thinks his party is in agreement with the governor over what needs to be done.
Malloy declined to comment on the legislative agenda presented by Republican leadership earlier in the afternoon because he had not seen the proposal and was not there to hear about it. He has met with Republican leadership from the House and the Senate and said he welcomes their ideas.
“They have an important role to play,” Malloy said.
House Minority Leader Lawrence Cafero and Senate Minority Leader John McKinney said their priority first and foremost is to reduce the size and scope of state government.
Click here to read their entire proposal.
Most of the proposal focused on cutting the state’s workforce and requiring employees and legislative staff to contribute more to their health care and pension benefits. However, those items are not under the purview of the legislature and would need to be negotiated by Malloy and the coalition of labor unions, but the current contract for everything but salaries goes through 2017. That means both sides, the governor and the unions, would need to agree to open the contract in order for any changes to be made.
Republicans also proposed consolidating 43 state agencies into 11 and repealing the corporate tax, while also creating a $400 tax credit for companies that hire people off the unemployment rolls.
“I have never hidden my desire to see a fair amount of consolidation,” Malloy said Tuesday.