Malloy Administration Prepares To Cut 2015 Budget

Just back from a National Governors Association meeting in Colorado, Gov. Dannel P. Malloy said the $99.5 million budget deficit reported by his budget office last week was “de minimis.”

“We’re going to have spending on par with what we’ve done before and that includes meeting obligations the state has not consistently met before,” Malloy said Monday at the Marriott in Hartford after brief remarks to a group of city police officers.

There will “be some tough decision to be made — let there be no doubt about it — but we’ve never shied away from making those kinds of decisions,” he added.

Malloy administration budget director Ben Barnes said later Monday morning that the administration plans to announce its rescissions before Friday’s Appropriations and Finance Committee meeting.

The 2015 budget’s $99.5 million deficit is less than 1 percent of the general fund, which means Malloy has the authority to make decisions about where to make the cuts without input from the General Assembly. He can rescind up to 5 percent of any line item and 3 percent of any fund without seeking legislative approval.

Barnes said that the “most ambitious” round of rescissions the administration made was around $170 million in 2012. He doesn’t anticipate eliminating the full $99.5 million, but wasn’t ready to give a number.

“We’re trying to find things that are realistic and can be obtained and we’ll try to do it in a way that minimizes the harm to the beneficiaries — the folks who enjoy state programs,” Barnes said.

Will any area of the budget be spared?

“Some mental health initiatives that came out of the new gun law,” Barnes said. “I think those are extremely unlikely to be considered for a rescission.”

However, “we probably will go further than some people would like in all sorts of areas,” he said.

But Barnes said he plans to maintain the safety net “in spite” of the rescissions.

“We’re talking about a relatively small amount of money. Maybe a quarter of one percent of total state spending,” Barnes said, trying to put the budget cuts in context.

The harder decisions will come in next year’s budget.

Barnes said next year’s budget will require cuts, which are “significantly more aggressive than anything we could implement with rescissions now.”

According to nonpartisan legislative analyst’s the state faces a $1.32 billion deficit in 2016 — up from a $1.278 billion projection a few months ago — and a $1.4 billion deficit in 2017.

Barnes said after Friday’s question-and-answer session with the legislature over the rescissions and the fiscal accountability report, his staff will “go deep into a hole” to develop the budget for the next two fiscal years.

Malloy will deliver the next two-year budget to the legislature on Feb. 4.

Malloy, who just won a second term earlier this month, campaigned on a pledge not to increase taxes. In his first term he implemented the largest tax increase in the state’s history. That year he faced a $3.67 billion deficit, which accounted for about 18 percent of the budget.

On Monday, he said he doesn’t plan to propose or sign any tax increases into law.

However, on the campaign trail Malloy made several other promises his administration will now be tasked to keep, including a tax credit for college tuition payments.

Student loan interest is tax exempt up to $2,500 on federal returns, but states don’t have similar provisions. On the campaign trail, Malloy said he wants to forgo $20 million in annual revenue in order to offer parents and students in Connecticut the same deal.

“A number of campaign commitments were made,” Barnes said. “I have every expectation we will be able to fulfill all those commitments. How we implement those over the course of the term will be driven to some degree, by the economic necessities of balancing the budget each year.”

He declined to say if the tax credit on student loan interest is something the administration will be able to implement in 2016.

“We may not be able to do them all at once,” Barnes said of the campaign commitments. “We may have to do them in a graduated way in order for them to be affordable.”