Malloy, GOP hold cards close in deficit showdown

The debate over Connecticut’s budget deficit might best be described as a poker game in which neither Democratic Gov. Dannel P. Malloy and the legislature’s Republican minority will tip their hands.

The legislators have asserted for two months they have cost-cutting ideas, but they won’t disclose them unless the governor invites them to closed-door negotiations.

The governor, who dismissed any hint of fiscal troubles from July through October as he sought re-election to a second term, understates the deficit now by $80 million, according to nonpartisan legislative analysts.

House minority leader. Themis Klarides

House minority leader. Themis Klarides

And while this debate wears on, a much larger deficit topping $1.3 billion still is forecast for the next fiscal year, which Malloy and the legislature must begin addressing when the governor presents his budget in just three weeks.

“The governor is out there making the tough decisions to make Connecticut stronger in the short- and long-term, and we don’t believe any one party has a monopoly on good ideas,” said Devon Puglia, the governor’s spokesman. “However, if you have ideas, share them with the governor’s office and with the public — because we should have a free and open debate about our future.”

Puglia added the GOP is “welcome to share specific thoughts with the governor, the media, and the residents of Connecticut going forward.”

But the leaders of the Republican minorities in the House and Senate, Rep. Themis Klarides of Derby and Sen. Len Fasano of North Haven, said again Wednesday they aren’t looking to reveal their cuts through a news conference or a media release.

“It has worked best in the past when we do this all together,” Klarides said, citing bipartisan deficit-mitigation plans crafted in 2009 and 2012. “We want to talk it through” at the negotiating table.”

Republicans recognize the Executive Branch, which runs government day-to-day, perhaps knows best where spending might be cut, Fasano said. “But there isn’t one person who knows everything about all problems,” he said, adding that Republicans don’t want to issue press releases “that can be brushed aside.”

Malloy 1-15-2014

Gov. Dannel P. Malloy

Malloy effectively dared Republicans last week, inviting them to meet him for lunch in the Legislative Office Building cafeteria – and to bring their cost-cutting ideas in writing.

Fasano, who was visiting family out of state, did not attend. Klarides did, but offered Malloy no proposals, urging instead bipartisan talks.

Deep cuts to state spending not mandated by contracts, such as municipal grants, social services and higher education, often spur strong public backlash, and rarely are proposed by legislators from either party.

And Democrats argue the GOP – while quick to insist on spending cuts in tough fiscal times – doesn’t always support their position with sound ideas.

  • Republicans suggested in 2009 and in 2010 that $800 million in controversial borrowing could be avoided by selling Bradley International and Hartford-Brainard airports. Nonpartisan analysts could not confirm a projected sales price. The GOP based it upon a then-proposed sale of Chicago’s Midway International Airport that hadn’t been completed.
  • The GOP proposed using a projected budget surplus last spring to avoid another $200 million in controversial debt refinancing. But when the projected surplus disappeared, Republicans included the debt refinancing in their own budget proposal, rather than offer spending cuts to take its place.

Republican leaders aren’t the only ones accused of holding their cards close.

While the Malloy administration reported a $121 million deficit last week, the legislature’s nonpartisan Office of Fiscal Analysis countered Monday with an estimate of $202.5 million.

fasano headshot

Senate Minority Leader Len Fasano

That roughly $80 million difference is larger than it seems at first glance.

State law requires the governor to submit a deficit-mitigation plan whenever the comptroller certifies a shortfall exceeding 1 percent of the general fund, which equals $174.6 million this year.

Comptroller Kevin P. Lembo’s next monthly budget assessment is due on Monday.

While Malloy has limited authority to cut spending unilaterally – and did so in November and again earlier this month – he probably needs lawmakers to approve some unpleasant steps to close the rest.

The larger the deficit, the sooner Malloy must answer some big questions in the current budget, including:

  • What happens to a $12.7 million revenue-sharing grant owed cities and towns this year? Though it can’t be canceled without legislative approval, the administration still holds the funds. And the Connecticut Conference of Municipalities says more than half of the state’s 169 cities and towns are counting on that grant to balance their  local budgets.
  • Will an $18.8 million transfer still owed to the Special Transportation Fund be made despite declining fuel tax receipts? The governor is expected next month to propose a major funding increase – starting next year – for transportation, as well as a legal “lockbox” mechanism to safeguard those funds. But it could be difficult politically to propose a “lockbox” for future dollars while simultaneously asking lawmakers to divert them away from transportation this year to close a general fund deficit.
  • Will Malloy ask lawmakers to approve $17 million extra needed to cover magnet school transportation costs? Nonpartisan analysts warned last spring that the new budget didn’t include enough funds to cover all magnet school costs.
  • Will the governor seek to tap the $519 million emergency reserve to close this year’s deficit? Malloy may need to save those funds to help close much larger shortfalls in the next two fiscal years, topping $1.3 billion and $1.4 billion, respectively.

If the deficit is too large for the governor to close by himself, Republican leaders say, it is better to face these issues now.

“You can’t fix a problem that you don’t want to admit exists,” Fasano said.

Klarides described Malloy’s approach to the deficit as, “When you put your hands over your ears and go ‘la-la-la’ — That’s no way to handle a problem.”

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