HARTFORD, CT — Gov. Dannel P. Malloy’s revised budget proposal cuts an additional $600 million in the first year of the two-year budget for 2018-19, bringing spending down 1.2 percent below the current year’s budget.
And within the proposal Malloy also continues to ask cities and towns for help.
The first year of Malloy’s revised budget would spend $19.49 billion in 2018, down from the $19.73 billion budgeted for the current year.
The proposal released at 12:15 p.m. Monday also makes some additional revenue changes. It eliminates the sales tax exemption on non-prescription drugs and increases the conveyance tax from 1.25 percent to 2 percent on residential real estate valued over $800,000.
It maintains the elimination of the property tax credit and a tax credit to the working poor that Malloy proposed back in February.
“Over the last several years we have asked state agencies to do more with less,” Malloy said. “They have delivered on that task and they will continue to realize efficiencies, but we must acknowledge that the state agencies will need to start doing less with less.”
The state’s income tax receipts eroded and revenues fell an additional $1.5 billion below expectations in April, creating a $2.2 billion deficit in 2018 and a $2.9 billion deficit in 2019.
It is nearly impossible to cut expenditures year after year and not expect changes in state services, the governor added.
The sentiment continues to be true about the state’s commitment in funding to local governments.
The revised proposal Malloy made Monday would cap the amount of money it expects cities and towns to pay into the Teacher’s Retirement System at $400 million, a concession of sorts on the part of the governor. Local elected officials had objected to picking up the pension costs because the amount is expected to increase by a few hundred million per year.
However, local elected officials are not going to be any happier with Malloy’s Monday proposal. The revised budget would eliminate the Pequot and Mohegan Fund, which are the funds redistributed to towns from the slot revenues the state receives from the two federally recognized tribes.
The funding has been distributed to all 169 municipalities in three annual payments for at least the last two decades. In 2014 and 2015, the state paid out about $61.7 million through the fund to the municipalities.
Malloy said the new economic reality means the state can only support as many grants and programs as “our available resources allow.”
Joe DeLong, executive director of the Connecticut Conference of Municipalities, took the governor’s proposal in stride.
“Governor Malloy’s proposal presented today is just one step in the process as we move toward a budget solution for the next fiscal year,” DeLong said.
He said the best path forward is “serious action on municipal cost containment, local revenue diversification, and enhanced service sharing. The state’s continuing budget crisis proves that such a solution is in the best interests of all Connecticut residents and businesses.”
Betsy Gara, executive director for the Council for Small Towns, said the proposal is still “devastating.”
“For more than 70 years, the state has chronically underfunded the Teachers’ Retirement System resulting in staggering increases in the state’s required contribution,” Gara said. “Now, instead of trying to reform the pension system to rein in costs, the state is trying to pass the burden onto property taxpayers.”
She said it’s unfair.
Malloy also revised the formula for the Education Cost Sharing grant and zeros out funding for an additional eight cities and towns. Originally, he had zeroed out funding for 22 towns under his ECS formula.
Hartford, New Haven, and Bridgeport continue to receive the most funding under the formula. Hartford would receive $17 million more, New Haven $9 million more, and Bridgeport $15 million more under the revised ECS formula.
The best outcome Connecticut residents can expect “is to adopt a responsible, balanced budget that does not rely heavily on new or increased taxes,” Malloy said.
The bulk of the revenue changes come from three areas: curtailing the transfers to the Municipal Revenue Sharing Account and Pequot and Mohegan Fund; increasing the real estate conveyance tax on properties valued above $800,000; and the elimination of the sales tax exemption for non-prescription drugs.
The state parks would also take a hit.
Malloy’s budget would cut an additional $8 million from the Department of Energy and Environmental Protection and most of that, about $6.4 million, would saved by converting most state parks to “passive management.”
Eric Hammerling, executive director of the Connecticut Forest and Park Association, said the recent layoffs leave only 35 full-time staff to manage 110 state parks.
“The governor’s recommendation would close campgrounds and leave even fewer services available to the public,” Hammerling said. “‘Passive management’ means that visitors will enter at their own risk and witness shameful neglect of the our most precious natural resources.”
He said the state should look at adopting a proposal that would require the state Department of Motor Vehicles to levy a $10 fee on vehicle registrations, which would be used to help fund park maintenance. Anyone with a Connecticut license plate could then enter and park at a state park for free.
“Connecticut’s State Parks generate more than $1 billion, support over 9,000 private sector jobs, and are visited by eight million people every year,” Hammerling said. “Every dollar spent on the parks generates $38 for Connecticut’s coffers. It makes no sense to continue to target them for cuts.”
However, the largest cut is to the Department of Social Services. Malloy is proposing reducing that agency’s budget by $83 million in 2018. Some of the reductions would be from eliminating the supplemental pool for hospitals, changing how the state’s Medicare savings program works, and rescissions to benefits for the poor under the Temporary Family Assistance program and Medicaid.
The proposal would also shift all juvenile justice services from the Court Support Services Division to the Department of Children and Families.
Rep. Toni Walker, D-New Haven, was baffled by the logic of the proposal.
“How sad, expanding an agency that struggles with compliance,” Walker said referring to DCF, which is still under federal court oversight.
She said CSSD is recognized nationally for their “Second Chance programming with juveniles.” Why would you merge them “into an agency that can’t complete court oversight in the basic area of ‘meeting children’s needs’?”
Malloy said it’s an executive branch function and the judicial branch should no longer be involved. He said the executive branch can operate the program more efficiently.
“We will not saddle future generations with unnecessary debt because state leaders lack the fortitude to make the hard choices,” Malloy said.
On Tuesday, Republican and Democratic legislative leaders are expected to unveil their own budget proposals and remained reserved in their comments about Malloy’s latest revision Monday.
“Today begins the reset of working toward crafting a responsible, balanced, bipartisan budget that reflects the fiscal realities we face and our priorities as a state,” House Speaker Joe Aresimowicz, D-Berlin, said. “As expected, the governor’s updated budget offers various options to consider, and along with our legislative proposals provides a solid basis to start, what I’m confident will be fruitful talks.”
Senate President Martin Looney, D-New Haven, echoed Aresimowicz’s remarks.
“We look forward to meeting with the governor and other legislative leaders on Wednesday for the next round of budget negotiations,” Looney said.
Senate Republican President Len Fasano, R-North Haven, said this underscores the severity of the economic crisis.
“There needs to be a bipartisan effort to pursue significant long-term structural changes so that we can restore confidence in our state today, and build a better future for tomorrow,” Fasano added.