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Malloy Wants To Plug Budget Gap With Surplus Funds

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(credit: www.cga.ct.gov/capitoltours)

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By SUSAN HAIGH
Associated Press

HARTFORD, Conn. (AP) – Gov. Dannel P. Malloy announced Friday evening that he has reached a deal with Democratic legislative leaders on how to close the remaining $400 million gap in Connecticut’s two-year budget.

The bulk of the gap relies on more than $319 million of the approximate $1 billion surplus built into the two-year, $40.1 billion budget. Malloy, a Democrat, had argued that it was fiscally prudent to create a revenue cushion in the plan.

“This plan preserves surplus in both years of the biennium, not as much as we originally intended and not as much as we would have liked to have,” Malloy’s budget secretary, Benjamin Barnes, said in a conference call with reporters. “We would rather make a compromise in that regard than make a compromise in our commitment to local governments or making a commitment in maintaining the safety net.”

Malloy faced a May 31 deadline to present the General Assembly with a plan to close the gap, created after his administration reached a tentative two-year, $1.6 million savings deal with the state employee union. Malloy originally had sought $2 billion in savings.

That tentative agreement, however, hasn’t been ratified by the approximately 45,000 unionized state employees. The 34 bargaining units aren’t expected to finish voting on the proposal until after the legislature adjourns its regular session on June 8.

Senate President Donald Williams Jr., D-Brooklyn, recently suggested that lawmakers in the final days of the session approve Malloy’s budget fix with language also approving the labor deal should it be ratified.

Minority Republican leaders criticized Malloy for relying on the surplus funds to balance his budget and not more substantial cuts. They have publicly questioned why Malloy set aside the extra revenues while raising taxes by $1.4 billion in the first year of the budget and $1.2 billion in the second year.

“We suspected and said that he was doing that because he was saving it to use for what he didn’t get from the unions. He insisted that was not the case. He was going to put it toward long-term debt, et cetera. He uses $320 million of the surplus to make up $400 million in cuts,” said House Minority Leader Lawrence Cafero Jr., R-Norwalk. “Classic Malloy. He says one thing, he does the other.”

Cafero and Senate Minority Leader John McKinney, R-Fairfield, questioned whether the additional cuts Malloy is proposing, $78 million over two years, are real reductions.

The list includes $2.5 million in reduced inmate medical services in fiscal year 2012, due to the anticipated reduction in the state’s inmate population through initiatives including a new credit program for early release for good behavior and a home confinement program for certain offenders. Also, there’s a $14.4 million reduction over two fiscal years for inter-district schools funding and a $52 million, two-year savings from re-estimating retiree health care funding requirements.

Williams, in a written statement, said Connecticut “is one-step closer to finally turning the corner” in its budget crisis.

“The agreement to eliminate the budget gap with responsible spending cuts and new surplus revenue is the best option for Connecticut’s struggling economy and job market,” the statement said.

Before the tentative agreement with state employees was reached, Malloy had threatened thousands of state worker layoffs and drastic cuts to state aid to cities and towns. It remains unclear, however, whether the unions will ratify the deal. Malloy has said he has another alternative budget if the agreement isn’t approved by workers.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

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