Malloy budget strategy is lean on spending cuts

Despite the state’s huge impending budget deficit, Democratic gubernatorial candidate Dan Malloy has unequivocally pledged to shield some large areas of spending from cuts.

Beyond that, he has made strong statements of support for a variety of other programs, leaving at least some advocates with an expectation that they, too, would be spared the budget ax by a Malloy administration.

An analysis of Malloy’s statements and positions suggests that if all these pledges are kept and expectations met, he would have few options beyond taxes and borrowing to close a $3.26 billion shortfall.

“There are a lot of things that aren’t off the table,” Malloy said in a recent interview, insisting that few segments of the budget have been unequivocally shielded from cuts. “I’m not making those promises. This deficit is a nightmare.”

One program that Malloy has clearly and repeatedly promised to protect is the $1.9 billion Education Cost Sharing program. The former mayor of Stamford and a longtime critic of Connecticut’s heavy reliance on property taxes, Malloy has pledged to maintain the program at current levels, although more than $270 million in federal stimulus used to bolster ECS grants this year won’t be available.

Malloy also has promised not to cut early childhood development programs that cost $213 million this year, and to restore a $15 million cut to the statewide tourism marketing budget.

Malloy’s GOP rival, Greenwich businessman Tom Foley, has made matching guarantees in all three areas, which combined equal about 11 percent of the current, $19.01 billion state budget.

But it’s a series of promises and other strong statements about health care, social services, labor and non-education town aid that could force Malloy to turn to big tax hikes, or leave interest groups disappointed.

Municipal Aid

Shortly after Malloy made it clear at an Oct. 6 forum sponsored by the Connecticut Conference of Municipalities that he wouldn’t cut education aid, CCM President and East Hartford Mayor Melody Currey asked if non-education grants, which total about $900 million, might be cut to close the deficit.

“We cannot do it (balance the budget) by shifting additional expenses onto your backs,” Malloy told hundreds of municipal leaders in the audience at the Connecticut Convention Center in Hartford.

The Democratic nominee went on to charge Foley, who insists he can close the deficit without tax hikes, would need to gut non-education grants to towns to keep that pledge.

“Understand, you are shifting (the deficit) to the people in this room,” Malloy said.

Currey, a Democrat, said last week she thought Malloy’s message on Oct. 6 was clear: “I assumed that meant he wasn’t going to cut any grants, otherwise the expense would be shifted onto us.”

But Malloy said in interview after that event that while he recognizes the importance of maintaining non-education aid, he wasn’t promising to do so. He later added that he apologized for any misunderstanding.

“Dan Malloy will say whatever is needed to get the applause in the room,” Foley said in an interview Friday. “He makes these commitments on the spur of the moment.”

The ‘Safety Net’

Malloy has been very specific regarding social services and health care for the poor and the elderly, commonly referred to as the state’s “safety net.”

“It is not my intention to balance the budget on the backs of those who are least among us,” Malloy said during an interview in late June. During debates, he frequently has said he would not “shred the safety net.”

But while his statements have been clear, his definition of the safety net is not.

Is it limited only to the $4 billion Medicaid program, which provides health coverage for poor families and nursing home care for about 20,000 low- and moderate-income seniors?

What about other high-profile, high-cost initiatives such as welfare for single mothers and their children and hospital emergency room treatment for the uninsured, which together cost $235 million this year?

Beyond that, though are more than six dozen accounts spread among four social service and health care agencies that appropriate close to $2 billion for everything from needle exchanges and nutrition assistance to rape crisis counseling and winter heating subsidies. And unlike welfare for single mothers and programs under the Medicaid umbrella, many of these smaller items are funded without any federal assistance.

Are these dozens of smaller programs all within the “safety net” and beyond the scope of any budget cuts for Malloy?

“I don’t know if I envision that broad of a vision of the safety net,” he said last week, adding that while preserving the safety net remains a top priority, he might have to look to combine or streamline some smaller programs to reduce costs.

But Malloy also conceded preserving services for those most in need will not be easy–or inexpensive.

“I’m not going to be the governor who puts people out in the streets,” he said. “I’m not going to be the governor who kicks people out of nursing homes.”

And nursing home care could be an area where Malloy needs to add funding to keep his word.

In the health care policy posted on his Web site, Malloy writes he would “properly fund our nursing homes to cover the actual costs of providing care. In urban areas, I will ensure the homes are kept open so local residents can remain near family.”

The Connecticut Association of Health Care Facilities, the state’s largest nursing home association, is suing state government in federal court, charging that the state’s method of funding nursing home care violates basic principles mandated by the federal Medicaid program.

The association objected to two changes state officials made to save $166 million this year: the cancellation of a scheduled rate adjustment and an accounting maneuver designed to push a portion of the June monthly rate payment into the next fiscal year.

Malloy said Friday he couldn’t pledge to restore those funds.

State Employee Salaries and Benefits

A major issue in the campaign has been whether Malloy has promised to protect more than $4.6 billion in the current budget to cover most state employee salaries and benefits. Armed with a state union questionnaire signed by Malloy, in which the Democrat agreed not to support state employee layoffs, Foley has insisted repeatedly that his opponent has a deal to exempt one of the largest segments of the budget from cuts.

Malloy said his answer on the questionnaire forestalls nothing, but until last week had not definitely said – as Foley has – that employees must be asked to provide wage and benefit concessions.

The former mayor frequently says “nothing’s off the table” when asked about concessions, and repeated Friday that his first task will be to approach unions about various proposals to streamline state government that union leaders contend have been ignored by Gov. M. Jodi Rell.

“I can’t get to the next level of discussions with them until I get through those,” he said.

But given the scope of the deficit, is that next level – wage and benefit concessions – as necessary as Foley contends?

“I think it’s a component” of a final budget-balancing plan, Malloy said, adding the key is first to show labor the respect it deserves, and review the unions’ ideas.

And do the state’s unionized employees expect, based on Malloy’s campaign statements, they will be asked to provide wage and benefit givebacks?

“I think the vast majority of the members of our unions believe that Dan Malloy understands that taking money out of the pockets of middle class families isn’t the best solution for fixing our economy,” Matt O’Connor, spokesman for the State Employees Bargaining Agent Coalition, said.

But O’Connor also noted that regardless of anyone’s expectations, Malloy hasn’t made any promises. “He has not given anyone the idea that there’s a commitment other than to listen to public employees and be a partner with them,” O’Connor said.

Public Colleges and Universities

Another large chunk of the budget, more than $1.2 billion, involves block grants to Connecticut’s public colleges and universities and to its vocational-technical schools.

Officials at the University of Connecticut and at the state university and community college systems have said budget cuts typically translate into tuition increases.

In his education platform, Malloy writes that “Our budget also supports public colleges, which results in significantly lower tuition. If higher education success is a fundamental plank in our state’s economic development strategy, we must maintain this commitment even in difficult budget times or we run the risk of eating away at our long term economic and fiscal strength.”

What’s Left?

Totaling health care, social services, municipal aid, higher education, payroll and benefits and combining them with Malloy’s guarantees, and the cost tops $14.7 billion.

Add another $2.2 billion to cover debt service, an obligation state government is legally required to meet, and the price tag reaches $17 billion, or 90 percent of this year’s budget. And that doesn’t count more than $160 million in rate adjustments needed just to bring nursing homes back to the funding level they originally anticipated this year.

Malloy has pledged to significantly reduce management levels in state government, including commissioners’ deputy agency heads, other executive appointments and the governor’s direct staff.

The budget also includes nearly $600 million for equipment and miscellaneous expenses, but that expense is spread among more than 60 agencies.

“Dan Malloy hasn’t talked about any significant spending cuts because there isn’t anything left” unprotected, Foley said. The tax increase is going to be whopping.”