Gov. Dannel P. Malloy postponed raises Thursday for about 1,600 non-union managers, saving more than $5 million this year – an opening, cost-cutting salvo on the eve of bipartisan negotiations to stabilize state finances.
The governor, who will begin talks Monday with legislative leaders to close an estimated $118 million deficit in this year’s budget – and to begin mitigating a larger shortfall after the next state election – also directed agency heads to intensify efforts to identify services that are not core government functions and therefore could be cut.
Malloy’s office didn’t release any statement about the directives.
But according to a memorandum from his budget chief, Office of Policy and Management Secretary Benjamin Barnes, cost-of-living and merit raises due next month for non-union managers are deferred “until at least January 1, 2016.” The directive does not affect $1.4 million in raises awarded in December 2014 to 200 appointees of Malloy and other constitutional officers.
The governor and the legislature had included about $5.1 million in this fiscal year’s budget to provide raises starting in mid-November for about 1,600 departmental and agency managers.
This included a 3 percent cost-of-living raise and merit pay hikes averaging about 1.5 percent, for a total average increase of about 4.5 percent.
“Because of the scale of the problem we face, we need to make every effort to ensure that we are able to realize savings,” Barnes wrote to commissioners.
The governor’s budget director also asked agency heads to continue several efforts that have been in effect throughout the fiscal year – and for much of the past five years, including:
- Deferring all spending possible “without impacting health and public safety.”
- Restricting overtime, hiring and other staffing costs whenever possible.
Barnes also tasked each department with reviewing all services it currently provides “with an eye toward identifying what activities are core government functions and what are not. We must acknowledge that our budget reality today demands that we consider reducing or eliminating some non-core services.”
Malloy announced on Monday that weaker-than-anticipated state income tax receipts have opened a $118 million hole in the budget. That represents a relatively modest two-thirds of 1 percent of the general fund, which covers the bulk of the state’s annual operating costs.
But there are other causes for concern.
This is the second deficit Malloy has reported since the fiscal year began on July 1.
In mid-September, the governor reported a $103 million shortfall – also attributed to weak income tax receipts – and closed that gap largely with emergency cuts to hospitals and social services. Legislators from both parties have since objected to those cuts and pledged to find alternative spending reductions.
Also, the legislature’s nonpartisan Office of Fiscal Analysis says state finances, unless adjusted, are on pace to run much deeper in the red – about $927 million – in 2017-18, the first fiscal year after the November 2016 state elections.
And if the income tax revenue erosion trends identified this fall project out into the next few years – as they traditionally do – the post-election shortfall swells to about $1.1 billion.