Gov. Dannel P. Malloy’s budget assumes the state has “passed through the crucible of that crisis,“ but Republican legislative leaders held a press conference Friday to outline their concerns with his budget proposal, and to put forth a few ideas of their own.
House Minority Leader Lawrence Cafero said Republicans remain hopeful Malloy’s projections are correct and the state isn’t facing a $423.9 million deficit in 2014 or a $225.6 million one at the end of this fiscal year.
Malloy’s budget projects a $438.5 million surplus in 2013, which he uses to pay for increases in education funding.
“We hope with all our hearts he is correct, but we must prepare in the event he is not correct,” Cafero said Friday.
Some of the dark fiscal clouds Republicans cite as concerns include the downgrading of the state’s bond rating, the drop off of revenue in the last quarter of 2011, and the administration’s inability to get all the labor concession savings they need to achieve.
“I don’t want to repeat history by saying we solved the problem,“ Cafero said.
In 2009, the Democrat-controlled legislature and then Gov. M. Jodi Rell fixed the two-year $8 billion budget deficit mostly by borrowing, some tax increases, and only about $500 million in spending cuts. After the longest budget battle in the state’s history Rell decided to let it go into effect without her signature. That budget had so many structural holes that it created the $3.5 billion deficit Malloy inherited when he took office in January 2011, Cafero said.
Cafero worries that Malloy’s second budget proposal could put the state back in a similar situation after the largest tax increase in the state’s history. He said if the state wants to increase spending this year by $329 million then it needs to find that same amount in spending cuts.
Sen. Minority Leader John McKinney said Malloy’s 2013 budget increases spending 3.2 percent over last year. That’s on top of the 5.1 percent increase in spending in 2011, the same year the state raised taxes $1.5 billion.
On the revenue side, it’s disturbing that Malloy’s budget numbers assume the state will see a 5.7 percent increase in revenue when economists like Fred Carstensen are predicting something more around 2.25 percent, McKinney said.
But Malloy’s Budget Director Ben Barnes said McKinney is misreading the numbers.
“The 5.7 percent growth rate cited by Senator McKinney is for growth in our tax base, not overall economic growth,“ he said. “Economic growth in Connecticut’s tax base is always greater than growth in the overall economy when the economy is growing, and lower than the overall economy during downturns.”
Regardless of Barnes‘ defense, “The fiction is we’re looking at surpluses, the facts are we’re looking at deficits,” McKinney said.
Barnes defended his numbers and the $423.9 million deficit in 2014.
“Every budget submitted over the decade before Governor Malloy took office showed deficits in the out-years,” Barnes said. “For reasons only the Republican leadership can explain, Governor Malloy is being held to a higher standard than his predecessors.”
Sen. President Donald Williams, D-Brooklyn, said the budget process under Malloy versus the budget process under Rell is like the difference between “night and day.”
Williams said there are signs the economy is improving and the state, no questions asked, will have a budget that’s balanced at the end of the fiscal year.
He admitted there’s still work to do, but said the state is in far better shape than it was.
He found it comical that “now they [Republicans] want to be the Bad News Bears” when two years ago they “aided and abetted Rell’s $2 billion deficiency.” Williams is referring to the mistake Rell made when she released a budget that closed a $6 billion gap, after having admitted it was $8 billion.
Williams recalled that the two sides wasted weeks arguing over the amount of the deficit. The debate eventually lead to consensus revenue estimates which forces the legislature’s nonpartisan Office of Fiscal Analysis to sit down with the governor’s budget office and reconcile the numbers.
Click here to read our story from earlier this week about the out year projections.
Republicans, who are in the minority, also proposed eliminating funding for the New Britain to Hartford busway, changing state employees defined contribution plans to 401K’s, capping the gross receipts tax on gasoline, and eliminating the cost of living increase for the Citizens’ Election Program.
Click here to read about more of the Republicans’ proposals.