Gov. Dannel P. Malloy challenged legislators recently to break their bad habit of resolving the state budget in the waning hours of the General Assembly session.
But while legislative leaders last week recognized that as a laudable goal, they also said that — if recent history is any guide — an early finish could produce a budget that is unbalanced before the next fiscal year even begins.
Democratic and Republican legislative leaders both told The Mirror that any revised budget for the 2016-17 fiscal year should reflect up-to-date trends in revenues, particularly those involving the state income tax.
“So this is my challenge to you and to me: Let’s not pass a budget on the final day of this session this year,” the governor told legislators in his State of the State Address on Feb. 3. “Let’s get it done early. Let’s do it so that we can spend those final days working on other proposals – both yours and mine.”
Malloy added that “if an idea didn’t get a fair hearing during the legislative process, then it shouldn’t be brought to the table at the eleventh hour. This is true of both Democrat and Republican ideas.”
Though the legislature’s Appropriations and Finance, Revenue and Bonding committees have begun their respective reviews of the governor’s proposals, Malloy also began meetings with caucus leaders last week in hopes of facilitating an early finish.
“We simply cannot afford to conduct business the same way year after year and expect different results,” Malloy spokesman Chris McClure said Friday. “We’ve worked to launch bipartisan discussions early as we work on an aggressive timeline to provide specific information about agencies’ priorities to the Appropriations Committee. The governor has been clear that we shouldn’t spend more money than we proposed and we look forward to accomplishing that goal with the legislature.”
But perhaps the biggest obstacles to achieving that goal rest with a few legal deadlines, and recent economic trends.
In even-numbered years — when legislators are up for re-election — the regular legislative session ends in early May. This year adjournment is set for May 4.
But to get a new budget done before then, legislators and the governor must know what revenues the state can expect.
And since half of all revenues to fund a nearly $20 billion annual budget come from the state income tax, knowing how that revenue engine is performing is crucial.
Traditionally that means monitoring the income tax receipts for about two weeks after the annual April 15 filing deadline for the income tax.
By law, the governor’s budget staff and the legislature’s nonpartisan analysts must produce on April 30 a consensus forecast of how revenues will perform.
So what happens if legislators adopt a budget in early April — using revenue projections last updated in mid-January — only to see the forecast change on April 30?
Further complicating matters, Malloy and legislators haven’t enjoyed the April 30th report since 2011.
Over the last four years, the April report has downgraded revenue projections compared with the mid-January forecast by an average of $215.6 million.
“It is a particularly risky endeavor to do a budget early this year,” House Minority Leader Themis Klarides, R-Derby said. “Our deficits are changing daily, not yearly.”
Klarides said “it is a laudable goal” to aim for early budget adoption, adding that many last-minute budget decisions in the past have been poor. But it’s essential that legislators believe the new budget is truly balanced when the session ends, she said.
Sen. Beth Bye, D-West Hartford, co-chair of the Appropriations Committee, said the April 30 report “is an important piece of the puzzle. Certainly we need the best information possible.”
Bye added that legislators have complained in recent years when Malloy has used his limited authority to unilaterally reduce spending when faced with mid-year deficits. “I’m always in favor of legislative control” of the budget, she said.
Would it be possible to adopt the budget before April 30 and still have updated income tax revenue projections?
“There are various other budget updates leading up to the” consensus revenues, House Speaker J. Brendan Sharkey said.
Legislators and the governor receive daily reports on income tax receipts between April 15 and April 30 from the Department of Revenue Services and the nonpartisan Office of Fiscal Analysis.
“We’ll consider adopting a budget after the conclusion of our process using the available data,” said Adam Joseph, spokesman for the majority Democratic caucus in the Senate.
Senate Minority Leader Len Fasano, R-North Haven, agreed with Klarides that downgrades in April revenue projections in recent years would make it “problematic to enact a budget prior to getting those numbers.”
But Fasano said if legislative analysts and the governor’s budget staff could begin their April review even a little earlier, it still would help legislators considerably in their race against the calendar.
“Making reasonable adjustments even a week in advance would allow the legislature to work on a budget that is as close as possible to the actual revenue numbers we will see after April 30,” Fasano said.