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Gov. Dannel P. Malloy (Hugh McQuaid Photo)

Gov. Dannel P. Malloy didn’t offer any new sweeping spending or tax proposals in his last budget address before the November 2014 election.

But he insisted the state is on its way toward economic recovery and attempted to head off any criticism of how he’s decided to get there.

“I also spoke about the work we’ve done to partner with Connecticut small businesses,” Malloy said. “Will every single one of those investments pay off? Of course not. And if one fails, the critics would say that’s reason enough to stop investing in small businesses altogether. We should not listen.”

He encouraged lawmakers to continue to push for change to help everyone in Connecticut participate in the state’s economic recovery.

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House Speaker Brendan Sharkey (Hugh McQuaid Photo)

“I think it’s appropriate for us to be cautious about how our recovery is going,” House Speaker Brendan Sharkey, D-Hamden, said Thursday following Malloy’s speech. “If you’re measuring our recovery by the size of the surplus it seems to be going very well, but I think we need as we go forward to be responsible with the taxpayers’ money as to how we’re actually spending whatever surplus we have.”

He said any new, large spending program would not be appropriate at this point. He said not everyone is experiencing the benefit of the recovery, which is why lawmakers must be cautious.

According to state Comptroller Kevin Lembo, the state will end fiscal year 2014 with a $506.1 million surplus. Malloy plans to put $250 million in the Rainy Day Fund, an additional $100 million payment to state employee pensions, and $155 million in $55 tax refunds to about 2.7 million taxpayers.

“We’re not stabbing in the dark,” Sharkey said. “We’re taking measured approaches and those results are starting to happen now.”

Malloy also used part of his speech to advocate for his proposal to raise the state’s minimum wage to $10.10 an hour — the highest of any state in the country.

“This is good public policy, it’s good economic policy, and it’s the right thing to do,” he said.

Malloy found bipartisan support on some issues. He received several standing ovations from the entire chamber when he talked about supporting small businesses and veterans.

But Republican lawmakers and Republican gubernatorial candidates believe Malloy used his speech Thursday to test the waters of his re-election campaign.

Malloy has not said whether he will run for re-election in 2014.

Danbury Mayor Mark Boughton, who is running for governor, said “this was an election-year budget speech.”

“He’s just spending borrowed money on those core constituencies he thinks he’s hurting with,” Boughton said outside the House chamber. “We’re seeing it in our polling.”

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Tom Foley (Hugh McQuaid Photo)

Republican Tom Foley, who came within 6,404 votes of Malloy in 2010, said the budget was full of “phony election-year math.”

“It made me wonder whether we actually live in the same state,” Foley said. “People are still hurting for jobs . . . most of the drop in our unemployment rate is because people have left the job market.”

Foley said it was irresponsible to say the state has a surplus.

The legislature’s nonpartisan Office of Fiscal Analysis estimated back in November that if the state maintained current spending and accounted for inflation then the state would head into fiscal year 2016 with an estimated $1.1 billion deficit.

House Minority Leader Lawrence Cafero, R-Norwalk, whose caucus proposed using $247 million of the $506.1 million surplus, said Malloy’s budget was “pure fantasy.”

He said the tax cuts Malloy proposed are not paid for in future budget years. He said just nine months ago when the legislature passed the two-year budget they delayed paying off the 2009 Economic Recovery Notes until 2018. The budget Malloy released Thursday does not to speed up those payments.

Malloy did chide the 2009 legislature for deciding to use the Economic Recovery Notes and delay payments to the state employees pension fund in order to balance the budget that year. 

“Think about that,” Malloy said. “In one fell swoop, the state of Connecticut undertook the largest deficit financing in its history, used up its entire savings, and refused to pay its pension obligations.”

Malloy went on to credit lawmakers in the chamber for helping to turn that around.

“Together we’ve turned a $3.6 billion deficit into a $500 million surplus,” Malloy said.

Cafero acknowledged that Malloy’s budget does make a pre-payment of $100 million to the state employees pension fund, “which I like,” but “all I would say is, governor, follow your own guidance.”

He said Malloy did “a 180 degree turnaround” by supporting a hike in the minimum wage. Prior to Tuesday, Malloy was content to let the federal government handle any increases in the minimum age. However, he proposed raising the state minimum wage to $10.10 an hour in three years.

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Sen. John McKinney (Hugh McQuaid Photo)

Sen. Minority Leader John McKinney, who also is running for governor, said he wished the governor had to run for re-election every year.

“For three years this governor raised taxes, now he wants to cut taxes. For three years this governor proposed to have retired teachers pay more into their healthcare and now he wants to give retired teachers a benefit . . .The only difference between last year and this year is it’s an election year and he’s coming out with policies to get re-elected,” he said.

Bridgeport Mayor Bill Finch, president of the Connecticut Conference of Municipalities called Malloy’s proposed budget encouraging and sensitive to local property taxpayers.

“I think towns and cities in general are very satisfied with the budget because it doesn’t balance the state budget and take it out of the hides of property taxpayers as has been done in the past,” Finch said. “This is a budget that was obviously crafted by a man who was previously a mayor and he understands how to help cities and towns.”