HARTFORD, CT — (Updated 4 p.m.) Connecticut might have a $5.1 billion deficit for the next two years, but it also has a $389.8 million deficit this fiscal year, which ends June 30.
The hole is too big for Gov. Dannel P. Malloy to fill on his own so he needs the legislature’s help to pass a deficit mitigation plan and avoid borrowing.
“Given recent revenue projections showing the state facing a potential shortfall, I find it necessary to take aggressive steps to ensure this year’s budget ends in balance,” Malloy said in a letter Wednesday to legislative leaders. “My overriding goal is to solve this year’s potential shortfall without engaging in deficit borrowing, particularly since the Economic Recovery Notes from the 2009 deficit will not be fully repaid until next year.”
Malloy’s proposal would cut about $33.5 million in spending from executive branch agencies. It would transfer about $99.5 million in revenue from other off-budget accounts, withhold a $19.3 million from cities and towns, and use the rest of the $235.6 million to help erase the deficit. Malloy is also asking the Judicial branch to find another $21 million and the legislative branch to find about $3.4 million in spending reductions.
The Judicial branch is expected to find the savings through labor costs, but it won’t involve any layoffs. The branch, through a spokeswoman, said they were able to find $18 million in savings from collective bargaining increases that won’t be expended this year and another $3 million from keeping positions vacant after employees leave voluntarily.
House Speaker Joe Aresimowicz, D-Berlin, and House Minority Leader Themis Klarides, R-Derby, said they will take a look at Malloy’s proposal and respond tomorrow.
“We want to know what we’re deciding on,” Klarides said.
There’s likely going to be vocal objections to the reduction of funding to municipalities, but there are few if any choices left.
“Towns have already had to tighten their belts to address midyear cuts in education funding and insufficient funding for the Local Capital Improvement Program (LoCIP),” Betsy Gara, executive director of the Council of Small Towns, said Wednesday. “Many towns had to address these shortfalls by cutting back on municipal programs or delaying critical infrastructure projects.”
She said additional cuts at this time will add to the uncertainty towns face in crafting budgets and setting mil rates.
“While we recognize that the state needs to take action to address the budget deficit, cuts in municipal aid force increases in property taxes which negatively impacts our state and local economies,” Gara said.
Joe DeLong, executive director of the Connecticut Conference of Municipalities, said this points to the need for reform.
“The General Assembly rescinding Pequot Payments to cities and towns is just more of the same,” DeLong said. “It’s time our state policy makers stop shoving their problems onto property taxpayers and start doing things a different way.”
Klarides said there might not be any good choices left, but “we cannot cut off people at the knees.”
However, the only other option at this point in the year is borrowing.
“I think both caucuses have said borrowing is not something we want to do,” Aresimowicz said.
The spending cuts hit social services hard, but that’s the reality when there are only four weeks left in the fiscal year, Rep. Melissa Ziobron, R-East Haddam, said.
Rep. Toni Walker, D-New Haven, said they are working on the 2018-19 budget deficit and facing the reality of the 2017 budget “does require everybody to rally together.”
“It’s all about the state right now,” Walker said.
