A few weeks after balancing the state budget entirely with spending cuts, the administration of Gov. Dannel P. Malloy is already warning state agencies to start planning for big reductions in discretionary spending in the following two fiscal years.
“Most agencies will likely face discretionary spending reductions of at least 10 percent below fiscal 2017 levels in fiscal 2018. As a result, we will be significantly challenged to provide all of the services and programs that many have come to expect,” Benjamin Barnes, the Democratic governor’s budget chief wrote all state agency leaders Wednesday.
“In many cases, I expect agencies may need to further reduce, or perhaps cease delivering altogether, certain programs or services, and additional headcount reductions may be necessary,” Barnes wrote. “Fiscal 2018 will be even more challenging than fiscal 2017. … Your planning and development of reduction options for fiscal 2018 should begin now.”
Agency leaders also received another memo Wednesday from the agency Barnes heads, the Office of Policy and Management, detailing how much of the $189.3 million in unassigned cuts that were included in the 2016-17 adopted state budget would fall on each agency.
For the Connecticut State Colleges & Universities system – which includes the state’s community colleges and regional Connecticut State Universities – the latest cut amounts to $14.5 million, and prompted discussion by the system’s governing board Thursday. The latest cut brings the system’s total for the 2016-17 fiscal year to $39.5 million.
“It is not insignificant, and we will have to deal with that,” said Erika Steiner, the budget chief for the 90,000-student system. “Although it’s not welcome news, it’s certainly not unexpected.”
The administration did not release the allotted cuts for other state agencies Thursday, saying individual line-item amounts had not been decided.
The $189.3 million in unassigned cuts (known as lapses and holdbacks) were part of the legislature’s and governor’s approach to cutting $847 million to close a glaring budget shortfall amid declining tax receipts. While adopted state budgets typically include unassigned cuts, this budget included much higher levels of such to-be-determined cuts.
State agency leaders have until next Friday to tell OPM which line items in their budgets the cuts will impact.
No decisions have been made yet on how to divvy out a $20 million cut to municipal aid the governor announced last week after the legislature failed to pass his criminal justice reforms. The legislators has until Monday to override the governor’s last-minute cuts to the budget.
But the deficits are only going to get worse, the legislature’s nonpartisan fiscal experts report.
For fiscal 2018 – which begins July 1, 2017 – the Office of Fiscal Analysis is projecting a $1.3 billion budget shortfall and in fiscal 2019 a $1.4 billion gap.
“Over the next two years, we have an opportunity to realign state governing in a way that will be sustainable and responsive,” Barnes wrote. “Many of the choices we will make in the coming year will be criticized, but we should remain confident that we can make important changes to state government while holding true to our ideals and our values.”