Office of Policy and Management Secretary Ben Barnes attends the Connecticut Voices for Children budget forum every year, and every year he tries to dodge questions about the budget his boss will release in about two weeks.
This year, instead of fielding those questions himself, he brought Gov. Dannel P. Malloy with him to provide answers.
While Malloy didn’t give away too much, he did say that he doesn’t always agree with Connecticut Voices for Children when it comes to the revenue side of the budget. Malloy said Connecticut needs to remain competitive with its neighboring states and multi-state corporations are watching carefully what Connecticut does with its tax structure.
Asked if he would support a statewide property tax, which has been pitched by Connecticut Voices for Children, Malloy said he won’t be proposing one.
Malloy said they’ve been talking a lot about obligations to the current and former state employees participating in the State Employee Retirement System, but they also can’t ignore the increasing payments that need to be made to the Teachers Retirement System.
Barnes said the state spends about 22 percent of its funds on supporting municipalities. It also spends $2 billion on education grants, borrows about $700 million for school construction, and spends $1.22 billion on the Teacher’s Retirement System.
“I don’t think we can ignore that anymore,” Barnes said, regarding the state’s spending on municipalities.
Barnes’ office has run several spreadsheets calculating student population, mill rates, and the amount of money the state spends on teacher pensions for each community. The spreadsheet then shows the calculations showing what cutting aid to towns by $100 million, $150 million, $200 million, $300 million, all the way up to $1.22 billion, would look like.
Barnes warned that it’s unclear what direction the administration will go as it finalizes the budget. What is clear is that the state is left with a series of difficult choices, Barnes added.
He said everybody has one thing that annoys them about state government, and “if you could just cut that, that would solve our problem.” Barnes said that type of thinking is not going to solve a $1.46 billion budget deficit the state faces next year.
Barnes suggested the state needs to be realistic about what the budget numbers represent.
“If a town takes a $500,000 cut in state aid, it’s not the end of the world,” Barnes said. “A town with a budget of 30-, 50-, or 100-million takes a cut of $500,000 in state aid, you know what it’s not the end of the world.”
He said he’s not saying that will happen when Malloy releases his budget on Feb. 8, but the governor himself hinted at municipal aid cuts on Jan. 4 during his State-of-the-State address.
The Connecticut Conference of Municipalities will be holding a press conference Wednesday to give the state suggestions on how to move forward if municipal spending cuts are actually on the table as telegraphed by Malloy during his speech earlier this month.
Malloy largely left municipal aid untouched during his first six budgets. However, he said municipal spending accounts for $5.1 billion of the state’s annual budget and can no longer be ignored.
During his first budget in 2011, Malloy was critical of New Jersey Gov. Chris Christie for passing along tax increases to municipalities by cutting state aid to those communities.
That year Malloy was facing a $3.67 billion deficit and enacted the largest tax increase in Connecticut’s history. He negotiated concessions with state labor unions and cut spending by a small amount.
Senate President Martin Looney, D-New Haven, said last week that even though the state’s fiscal situation isn’t as dire as it was in 2011, he would embrace the same type of balancing act of labor concessions, tax increases, and spending cuts.