(Updated 6:58 p.m.) Democratic Gov. Dannel P. Malloy would close a $922 million budget deficit with deep cuts to education, a sweep of an account created by the legislature to provide property tax relief, and an increase in health insurance contributions for non-union legislative and judicial branch employees.
The governor’s second budget assumes the state will collect most of the $12 million in revenues the Department of Revenue Services mistakenly credited to 120,000 taxpayers to close the approximately $933 million budget deficit.
The revised budget also assumes a reduction of 2,500 positions, a majority of which will be done through layoffs. No dollar amount has been attached to the reduction in the workforce, according to Malloy administration budget director Ben Barnes.
Malloy’s revised budget cuts the funding for K-12 education by about $44 million and sweeps $101.4 million from the Municipal Revenue Sharing Account created last year by the General Assembly to offer property tax relief to municipalities.
Betsy Gara, executive director of the Council of Small Towns, was unhappy with the cuts to education funding and said so shortly after the governor’s revisions were released.
“The Governor’s proposed budget is a disaster for the vast majority of small towns. Make no mistake — this budget is a tax increase. Deep cuts in education funding will force steep increases in property taxes,” Gara said.
Malloy’s revised budget doesn’t take any of the half-a-percent of the sales tax the legislature set aside last year to help pay for transportation improvements.
“I’m saying that if we don’t build a transportation system to undo the damage that we’ve done in the past, we’re not going to grow our economy,” Malloy said. “If we raise taxes and go down that road, we’re not going to grow our economy.”
He said the sales tax is the only tax that grows on a regular basis and transportation has traditionally been tied to taxes that are falling as the number of electric vehicles on the roads increases.
The revised proposal would save $5 million by asking political appointees and non-union legislative and judicial branch employees to contribute 20 percent of the cost of their health care benefits. They currently contribute 12 percent of the cost.
“Our expectations need to change. We cannot afford to fund everything as we have in the past,” Malloy said during a press conference in his state Capitol office.
The revised budget also cuts $49 million in hospital funding that lawmakers continue to restore every time Malloy suggests the cut.
“Once again, Governor Malloy is proposing that the hospitals of Connecticut, which serve millions of residents every year, bear a disproportionately large share of the budget reductions,” Jennifer Jackson, CEO of the Connecticut Hospital Association, said.
The budget would also maintain the hundreds of millions of dollars in cuts to human services that Malloy proposed back in February.
“The budget adjustments issued by the governor today target the most at-risk and fragile citizens in Connecticut with spending cuts that would dismantle the system of community providers and leave thousands of individuals with nowhere to turn,” Jeffrey Walter, interim CEO of the CT Community Nonprofit Alliance, said.
The extraordinary move by Malloy to create a second budget followed the decision by the Democrat-controlled Appropriations and Finance Committees to release budget proposals that fell $360 million short of closing the budget gap.
Typically, Malloy releases a budget in February and then the legislature releases its own budget before they go behind closed-doors to negotiate a final product.
Republican legislative leaders, who have been included in budget negotiations this year, thanked Malloy for recognizing the full scope of the deficit. However, they are not happy with how he gets there.
Senate Republican Leader Len Fasano and House Minority Leader Themis Klarides said the state needs to make three changes. It needs to mandate legislative approval of labor contracts, cap bonding, and create and Office of Overtime Accountability.
“Any 2017 budget that lacks these long-term policy changes only sets us up for more failure in the future,” Fasano and Klarides said in a statement.
However, Republicans have not released another draft of their budget and the Democrat’s budget didn’t address the full scope of the problem, Malloy said.
Malloy said he’s not going to negotiate against his budget when “no one else is putting a budget forward.”
“It’s difficult to have discussions with folks who aren’t putting a budget on the table,” Malloy said.
House Speaker Brendan Sharkey, D-Hamden, said the legislature plans on putting together another budget to address the shortfall due to declining revenues.
“We appreciate the fact the governor produced a budget, but obviously it’s not anywhere near what I think would get votes on either side of the aisle in this house,” Sharkey said. “It’s up to us at this point to prepare a budget adjustment before the end of this session for the governor to sign.”
Sharkey said when they were putting together their budget proposal the governor’s office refused to give them any information about anticipated labor savings.
As far as the sweep of the Municipal Revenue Sharing Account goes, Sharkey said he doesn’t take that proposal seriously because it’s “not something that would garner any votes here in the House.”
He described the back and forth between legislators and the governor as “a little bit of gamesmanship.”
Sharkey said his House caucus is more willing to look at the governor’s transportation funding to help balance the budget.
The top lawmaker bristled at the notion that Malloy was driving the debate.
“The legislature produces budgets. The governor signs them,” Sharkey said.
But with the size of the deficit the state is facing, Malloy has the ability to make sure they do their job.
Malloy said if the General Assembly adjourns on May 4 without re-adjusting the 2017 budget, then he will call them back into session the next day.
“We’ll be here until we get the job done,” Malloy insisted.