The economy has changed and Connecticut has to change, too. That was the message Gov. Dannel P. Malloy emphasized in his state of the state address Wednesday.
“A shifting workforce, the rapid rise of technology, and stagnant wage growth have made this recovery tougher for everyone, everywhere,” Malloy said.
Malloy said Connecticut families and businesses are adapting to the new economic reality and the state’s budget has to reflect that new reality.
“Going forward, we need to limit our spending to available resources,” Malloy said.
One lawmaker joked that Malloy sounded more like a Republican than a Democrat in pitching a $560 million spending cut in 2017 and another nearly $700 million in 2018.
“This budget is based not on how much we want to spend, but how much money we actually have to spend,” Malloy said to a standing ovation.
Malloy also received a standing ovation for calling for the adoption of a constitutional spending cap and a desire to pass a budget before the last day of the legislative session — that idea actually got two standing ovations.
Voters approved a constitutional spending cap in 1992, but the legislature never fully adopted it, which, according to a recent legal opinion from Attorney General George Jepsen, makes it unenforceable.
The cap originally was proposed to quell anger over implementation of a state income tax in 1991. The cap is calculated by tying increases in state spending to either personal income growth or the rate of inflation.
“The wisdom of the voters was correct in 1992, and it is correct now. Connecticut needs to enact a spending cap to keep spending in check,” Malloy said.
Rep. Arthur O’Neill, R-Southbury, said there are a few details that need to be worked out, but he doesn’t think adopting the constitutional spending cap should be that complicated.
“We already know pretty much what needs to be done,” O’Neill said.
Perhaps the biggest change, which has yet to be embraced by lawmakers, involves how state agencies get their budgets. Instead of line items for specific programs, state agencies would receive a budget and would get to decide how it’s spent.
Correction Department Commissioner Scott Semple said even though it’s likely to be more work for him, he appreciates what the governor is trying to do by giving him more flexibility over his budget.
“I especially think it’s appropriate that he’s focused on the transparency,” Semple said.
Malloy wants to use the state’s “business intelligence tools available for the state accounting system, along with the Open Data Portal, that will enable agencies to report on the Internet detailed, meaningful, real-time data about spending and results for the public to see.”
Entitlement accounts like Medicaid and aid for the disabled that will remain distinct appropriations, along with municipal aid, are not included in the new budgeting method.
Senate Minority Leader Len Fasano, R-North Haven, said what he hears the governor saying when he talks about this new way of budgeting is that the Democratic majority in the legislature doesn’t have the will to make the necessary cuts to balance the budget.
“What he’s saying is ‘because you won’t, I will’,” Fasano said.
Fasano said he doesn’t believe that’s the direction the state should be going. He said they’re legislators who are elected to enact policy and balance the state budget.
“This is not a dictatorship where he controls more and more every day and where the Democrats in the majority are so scared to make a decision,” House Minority Leader Themis Klarides, R-Derby, said.
House Majority Leader Joe Aresimowicz, D-Berlin, said they take their responsibility to come up with the budget and fund it “very seriously.” He called the governor’s decision to allocate money in large chunks to state agencies “problematic.”
He said he’s willing to have a discussion about it, but “it’s just problematic from the onset.”
The budget Malloy unveiled Wednesday didn’t include any tax increases and the state’s biggest municipal lobby seemed happy with the direction.
Joe Brennan, president of the Connecticut Business and Industry Association, said he thinks it was a “tough, but necessary” budget message.
“If we really are going to start growing again, we need to deal with this uncertainty that’s been hanging over Connecticut for quite awhile,” Brennan said.
The business community has been asking for predictability and it’s been asking the state to fix its unfunded pension liability.
Malloy signaled that he will ask the state labor unions to open up the health and pension contract that doesn’t expire until 2022.
