When Democratic Gov. Dannel P. Malloy’s budget office asked state agency heads to give them options about where to cut on Sept. 6, it also estimated that the budget was about $130 million in deficit even though a few weeks later it reported it was balanced.
The $130 million deficit wasn’t spelled out in the letter to state agencies, but a balance sheet included in the letter showed the state only expected to receive about $17.53 billion in revenues in 2017. Just a few weeks later on Sept. 20 it reported the state will receive $17.88 billion in revenues.
At an unrelated event Tuesday, Malloy said the letter to the commissioners was a planning document and the other letter sent monthly to state Comptroller Kevin Lembo is a letter that estimates where the state is in relationship to the adopted budget.
“We have been very conservative with our commissioners about what they’re going to have to spend,” Malloy said.
The planning document sent on Sept. 6 asked agencies to come up with proposals that would cut 10 percent from their 2017 budget. The proposals were due Oct. 7, but many agencies have asked and been granted extensions.
“There’s no election year tricks,” Malloy, who is not up for re-election this year, said.
The Democratic Party in the General Assembly is fighting to hold onto its 87-64 majority in the House and its 21-15 majority in the Senate.
Senate Minority Leader Len Fasano, R-North Haven, said he’s asked the nonpartisan Office of Fiscal Analysis to weigh in on the matter. He said he’s waiting to hear its conclusion before deciding whether the numbers were estimated properly.
In the meantime, the discrepancy seems to show the administration trying to hide a deficit until after the election, House Minority Leader Themis Klarides, R-Derby, said. Or that’s at least how it appears.
At the very least the Malloy administration owes the legislature an explanation about the discrepancy, Klarides said.
“Is there a public number and a private number? Is this the Hillary Clinton playbook?” she added.
Fasano, who spoke in Wallingford after attending an event with Malloy, said it “raises the speculation in my mind that we need to look at this a little further.”
Office of Policy and Management Secretary Ben Barnes said Tuesday that they used the worst case scenario when they sent the letter to state agencies on Sept. 6.
He said there was a decline in revenue over the summer and if that decline rolled forward into 2017 then it accounts for most of the decline predicted in the Sept. 6 letter.
However, since that time things have “stabilized” Barnes said.
The state received a legal settlement from RBS Securities Inc., a subsidiary of the Royal Bank of Scotland. The company agreed to pay Connecticut $120 million — the largest single state settlement ever — to resolve allegations the bank’s handling of mortgage-backed securities directly contributed to the 2008 financial crisis.
The 2017 budget already estimated the state would receive $40 million in legal settlements this fiscal year, so that means it has about $80 million more than anticipated.
That’s still $50 million shy of the $130 million discrepancy between the planning document and the actual budget estimates submitted to Lembo’s office.
But Barnes said he feels “pretty good” about where the projections for revenue are at the moment.
He said the only thing shaking his confidence is the Nov. 8 presidential contest and the possibility it will impact on the stock market.
