Gov. Dannel P. Malloy’s fiscal year 2013 budget will increase spending by $329 million, or 1.6 percent over last year bringing the total budget adjustment to $20.73 billion. The additional spending will come from the projected $438.5 million surplus.
Even though this year’s budget is about $73.6 million in the red, Malloy wants to use next year’s surplus to cover new spending initiatives, including $128 million on education reform.
The measure is likely to be met with criticism from lawmakers, who were already beginning to express reservations about the current budget projections unraveling over the past few weeks.
“Seems like a gimmick to me,” Sen. Minority Leader John McKinney, R-Fairfield, said.
The idea that the state would end this year with a projected surplus of close to $500 million faded fast over the past two months when income tax receipts didn’t meet projections.
McKinney said Malloy has been adamant about presenting transparent budgets, but at first glance this budget seems to employ gimmicks, such as transferring programs traditionally funded through the operating budget over to the capital budget. An example he said is the underground storage tank fund.
Office of Policy and Management Secretary Benjamin Barnes defended the budget Wednesday morning during a briefing with the media prior to Malloy’s noon address.
Click here for the budget documents.
Barnes said the surplus funds were always going to be used to help the state meet its long term obligations including an increase of $123 million in additional pension funding. That additional funding is over and above the $177.4 million annually required contribution.
The budget also makes big investments in education, including an additional $50 million in Education Cost Sharing funding for the state’s lowest performing school districts.
It also asks municipalities to increase their contribution to charter school students by $1,000 per pupil, which works out to about $6.5 million in funding that they will have to find.
But it’s not all about new spending initiatives.
Barnes said the budget also cuts about $120 million. Most of those cuts from changes to the Low-Income Adult Medicaid program, which is likely to cause Democratic lawmakers and health care advocates to cry foul.
By instituting a $25,000 asset tests on individuals applying to the program and taking into consideration the assets of parents, if a child is under the age of 26. The estimated savings from those policy decisions are estimated at about $22.5 million. The state will also be looking to save money by changing the way medication is administered. It plans on allowing non-nurses such as home health aides to administer medication for a savings of about $20.5 million.
The budget is anticipating an underlying economic growth rate of 5.7 percent in fiscal year 2013. Barnes said that’s not the same number as the 5.1 percent increase in revenues used to formulate the consensus revenue estimates which shows revenue dropping $95 million this year and $139 million in fiscal year 2013. Already the surplus anticipated in fiscal year 2013 has dipped from the $635 million to $438.5 million over the first seven months of the two-year budget.
The budget does assume an additional $8.7 million increase in revenues from the implementation of Sunday liquor sales. And by beefing up the staff at the Department of Revenue Services, the budget assumes stepped up enforcement of the current tax laws will yield an additional $13 million. It also seeks to maximize federal funding.
“We believe that there are going to be challenges in the future. There have been challenges in the past. We will continue to honor the spending cap and we believe we will be able to achieve spending cuts to do that,” Barnes said before rushing off to another obligation.