As he prepares his second budget address, this one focused on education reform, Gov. Dannel P. Malloy took a moment Tuesday to put things into perspective.
“We have traversed a tremendous amount of territory in the last 13 months,” Malloy said. “Going from a state with the largest per capita deficit in the nation to one where we established our means and we’re going to live within them.”
“I’ve said this from day one that I manage for long term results,” Malloy said following a press conference on strengthening teacher preparation standards.
It’s something he did as mayor of Stamford and it’s a philosophy he will continue to embrace as governor.
But governing for long term results is difficult.
In December the state anticipated ending the year with a surplus and by mid-January it was bleeding red ink because tax revenue was lagging, forcing the governor to make rescissions.
Roy Occhiogrosso, Malloy’s senior communications adviser, said the governor is confident in the current budget projections and is certain the state will end the year in the black.
However, it won’t be clear until Wednesday exactly how much Malloy plans on spending on his education reform package and what other parts of the budget may be cut in order to accommodate the new spending.
Over the past few weeks he’s rolled out numerous proposals to help improve low performing schools, build five new charter schools, increase the number of preschool slots by 500, and change the teacher certification process.
House Minority Leader Lawrence Cafero, R-Norwalk, said there’s a lot his caucus supports in the education proposals, but the question remains how Malloy plans on funding it.
“The revenues are not coming in. The spending is far more than we had budgeted, or anticipated. Less revenues, more spending means big deficit,” Cafero said Tuesday.
He said the budget is the “800 pound gorilla in the room” that has not “turned out the way we had all hoped.”
He said he knows Malloy is optimistic about ending the year in the black, “but every sign is showing that’s not going to be the case.”
He said there are some serious problems with the state’s budget that the governor has to acknowledge and deal with. Up until this point Cafero said Malloy’s strategy is to say everyone else is wrong and he’s right.
Fred Carstensen, director of the Connecticut Center for Economic Analysis, expressed concern Tuesday about the consensus revenue estimates, which shows revenue dropping off by $95 million despite a $1.5 billion increase in taxes and a close to $500 million built-in surplus.
He said the forecast, put together by the Office of Fiscal Analysis and the Office of Policy and Management, assumes revenue will improve 5.1 percent, but they don’t offer any explanation as to why they’re making that assumption.
He said there’s not one single economist who works for either OFA or OPM and it’s unclear what kind of economic modeling they’re using in order to get to that number. Also, with Wall Street shifting to more salary and less bonus based pay systems, those living in Connecticut will have less income on which they pay taxes, he said. He estimated the revenue growth would be closer to 2.5 percent, which means the state could be in a deeper deficit than initially projected.
But putting a number on it isn’t really Carstensen’s point.
“My point is we can’t really have a discussion about revenue proposals unless we have the data used to compile them,” he said. “It’s a criticism of the process, not of the individuals who participate in it.”
Office of Policy and Management Secretary Ben Barnes said Tuesday that he has great respect for Professor Carstensen, but is confident the consensus revenue estimates were carefully constructed and are accurate. He said the administration has every intention of ending the year in balance under Generally Accepted Accounting Principles.
Rep. Joseph Aresimowicz, D-Berlin, said he’s pretty confident the state will end the year with a balanced budget.
“There are some hefty price tags going along with some of the recommendations,” on education reform, he said. “The fear amongst my colleagues is what’s that going to do to ECS [Education Cost Sharing] funding.”
He said he doesn’t want to see towns pitted against other towns when it comes to funding education. Malloy has promised to hold munciipalities harmless in the second year of the two year budget, which has many wondering how he will increase education funding to 30 of the lowest performing school districts without taking money away from the others.
Malloy has saved that part of his budget proposal for Wednesday afternoon.
On the revenue side, “There is zero appetite in this building for increasing revenues by way of taxes,” Aresimowicz said.
Malloy has promised no new tax increases in his budget address, but left the door open to public policy changes which may boost revenues to the state.