There’s only $406 million in the Rainy Day Fund and Gov. Dannel P. Malloy was coy Friday about whether he will use that money to close what’s expected to be a $560 million budget deficit.
Malloy, who inherited a $3.67 billion deficit when he was first took office back in 2011, pointed out that the former Republican administration used $1.5 billion in Rainy Day funds to help balance the budget and “avoid making the tough decisions.”
Once Malloy took office the amount of money in the Rainy Day Fund was zero. In order to balance the budget those first two years, Malloy and lawmakers approved a $2.6 billion tax hike—the largest in state history.
Haunted by a stubborn economic recovery, Malloy has faced deficits every year he’s been in office. However, in previous years he hasn’t had much of a Rainy Day Fund. Rebuilding it has been a focus of his administration even though he had to use about $113 million of it to close the 2015 budget deficit.
“I think a Rainy Day Fund should be used for rainy days,” Malloy said Friday. “I don’t think it should be an excuse not to make hard decisions. I don’t believe it should be built into budget assumptions.”
Malloy will propose his budget to the General Assembly next Wednesday and it’s likely to include some tough spending cuts.
Budget analysts have estimated that the state will end fiscal year 2016 with anywhere between a $26.8 million deficit to a $72 million deficit and 2017 with a $502 million to $560 million deficit.
It’s still unclear what deficit Malloy plans on using to build his budget, but the budget must be balanced by the end of the fiscal year. Since it’s an election year, the General Assembly is expected adjourn on May 4 with a budget in place.
As far as borrowing money to cover the deficit, like they’ve done in previous years, Malloy said “it’s not high on our list.”
Tax increases? Malloy said he’s not proposing any.
“I am not proposing any tax increases,” Malloy said.
Malloy also didn’t propose any tax increases last year, but he canceled previously approved tax cuts, before eventually signing a budget that increased taxes nearly $2 billion.
Malloy defended last year’s budget by pointing out that he and the Democratic majority in the General Assembly dedicated half a cent of the sales tax to lower motor vehicle taxes in 32 communities and another half a cent to help fund transportation improvements.
“The largest property tax relief in the state of Connecticut,” Malloy said.
Taxpayers in those 32 communities will see the impact of that when they get their tax bills this July.
“I’ll take the beating I get for the fact that we made changes, but sometimes it would be nice if people understood what we actually did,” Malloy said. “We’re moving the state forward and correcting years and years and years of abuse and ignoring the needs of transportation in the state of Connecticut.”
Malloy said he still needs time to calculate what the bond cap will be fore 2016. He said he expects to have that number for the next Bond Commission meeting on Feb. 26.
During Friday’s meeting Malloy approved $505 million in general obligation bonds and about $95 million in special revenue bonds for a variety of projects.
About $68.9 million of borrowing was approved for road repaving and another $30 million in local road grants to cities and towns. Nearly $78 million was earmarked for affordable housing projects in 15 communities and $10 million was allocated for the Small Business Express Program, which helped about 1,500 companies.