There are still plenty of cards Gov. Dannel P. Malloy will need to lay on the table today when he gives his budget address to the General Assembly.
Toward the top of the list will be how he plans on cutting an estimated $800 million in spending in the first year, how he defines the safety net, and how he plans on achieving $2 billion in state employee concessions and cost savings in the biennium.
The spending cuts have been a closely guarded secret over the past few weeks, but Republican lawmakers who received their budget briefing Tuesday morning shared what they could.
Rep. Vincent Candelora, R-North Branford, said they will be reducing the number of eye glasses and contacts and dental services received by low-income individuals on Medicaid. He said he also was told there was going to be an asset test imposed on those applying for those types of social services.
Asked about those cuts and if they fall under the category of the “safety net,” Roy Occhiogrosso, Malloy’s senior communications adviser, said “the governor never said that everyone wasn’t going to have to sacrifice.”
“Shared sacrifice means everyone,“ Occhiogrosso said. “So there are social service programs, health and human services programs that are getting some cutbacks and those cutbacks are going to be felt by people. We acknowledge that, but we feel those cutbacks have been made in a fair humane way that preserve the basic safety net.”
There are some substantial cuts that can be made while maintaining the safety net and not resorting to “the fiscal gimmickry of the past few years,” he said.
The portion of the budget Malloy’s staff shared on Tuesday shows spending will increase 2.4 percent in the first year and another 2.4 percent in the second year. Those increases are related mostly to increases in the special transportation fund and a tax on hospital profits.
The hospital tax is designed to raise about $151 million per year. Those funds then would be returned to the state’s 32 hospitals in the form of payments to offset the costs of treating uninsured and Medicaid patients. The state will have to spend about $326 million, in order to received a reimbursement of about $477 million from the federal government. It’s a tax that’s been levied in the past, but was disbanded sometime in the 1990s.
When asked if the budget eliminates 150 jobs, Malloy’s Budget Director Ben Barnes said those are the net job losses from the consolidation of state agencies. But it’s unlikely to be the total number of jobs eliminated after Malloy’s entire budget is released.
“Let’s just say that’s accurate for now,” Occhiogrosso said of the 150 job losses.
The comment hints at a possible layoff announcement, but most of the unions are protected by a no layoff provision negotiated with former Gov. M. Jodi Rell in 2009. That protection expires on June 30 of this year.
However, there are two bargaining groups, the Correction Officers and Correction Supervisors, who did not agreed to the 2009 agreement and currently have no job protection, aside from the nature of their jobs and their duty to public safety.
The state employee unions, who have been careful to say they haven’t opened up negotiations on the collective bargaining agreement with Malloy were less than pleased to hear they will be asked to come up with $2 billion in concessions and cost savings. That contract originally negotiated by former Gov. John G. Rowland doesn’t expire until 2017 and unions sources have said Malloy hasn’t asked them to open it.
A statement Malloy himself agreed with on Tuesday.
“When their statement says we’re not in collective bargaining it’s absolutely correct,” Malloy said.
He said collective bargaining carries with it a legal definition and neither side had been willing to take steps to open the contract.
“Everyone’s going to be upset, that is a certain reality,” Malloy said Tuesday during a brief press conference.
Aside from state employee unions, it’s likely almost every taxpaying citizen is upset with the $1.5 billion tax package Malloy released earlier this week, which creates five new income brackets, increases the sales tax to 6.35 percent on all retail purchases, and eliminates the tax exemptions on everything from yoga studios to haircuts.
“Picture a person who’s making about $60,000 a year who realizes that their income tax just went up, that the $500 they were able to write off on their income tax because of property tax they paid will no longer be there,“ House Minority Leader Lawrence Cafero, R-Norwalk, said Tuesday. “And, by the way, if they have to go and get gas for their car, it’s an increased cost.”
When Malloy talked about shared sacrifice, Cafero said his caucus assumed that expenditures would come down and revenues would go up. However, he said what Malloy has shown them thus far is a budget that maintained spending, while revenues increased.
“I don’t think that was the expectation when we started this process,” Cafero said.
But Malloy seems to be taking it all in stride.
“Nobody wants more taxes. I don’t want more taxes, but do you think that people of Connecticut believe we should borrow today to cover operating expenses and hand that over to somebody else,” Malloy said. “I don’t believe they believe that either. There is no easy decision in this.”
He said the heart of the matter is that “we’ve been on an unsustainable track for a very long period of time.”