Malloy: There’s a budget deficit, but it’s really, really small

Gov. Dannel P. Malloy with his budget chief Benjamin Barnes

Gov. Dannel P. Malloy with budget chief Ben Barnes

Gov. Dannel P. Malloy reported a minuscule state budget deficit Thursday —  projecting a $6 million shortfall in state government’s $17.9 billion General Fund.

But while the administration appeared almost defiant, conceding a shortfall that matched only a fraction of competing deficit forecasts, Republican legislative leaders charged Malloy continues to ignore Connecticut’s fiscal problems.

“We are projecting a minor $5.7 million operating deficit,” Office of Policy and Management Secretary Ben Barnes, Malloy’s budget chief, wrote in his official monthly forecast to Comptroller Kevin P. Lembo. “Given that our estimates reflect information only through the first quarter of this fiscal year, this projection does not represent a material deviation from the budget plan.”

Barnes said that state tax receipts are down about $77 million, but said this has been offset entirely by a one-time legal settlement in the state’s favor with a Stamford-based bank.

Another fiscal problem that the Malloy administration recognized at this time was a $5 million payment the state owes as part of a settlement with state employee unions over layoffs imposed illegally by Republican Gov. John G. Rowland in 2003.

Still, it comes just six weeks after the administration reported a fiscal hole 23 times larger than this one in a memo to dozens of agency heads.

“These budget numbers from the governor’s office are at odds with what every other reasonable observer knows and what other independent analysts have stated: Connecticut’s finances are a mess and 20 days before the election this partisan Democratic office wants to confuse and defuse when it comes to the salient facts,” House Minority Leader Themis Klarides, R-Derby, said. “We are in huge trouble and we all know it will come out after Nov. 8, Election Day.

“Just as he said during the 2014 campaign ‘there is no deficit, there will be no deficit,’ the Governor has no clothes.”

“The governor has downplayed and misstated facts for at least a year,” Senate Minority Leader Len Fasano, R-North Haven, said. “The inability to face the real facts just gets this state deeper and deeper and deeper into trouble, and the enablers are the Democratic majority.”

“This is serious business about the shape of our Connecticut economy,” Fasano added. “They think this is just a game. And that’s really sad.”

The $6 million shortfall the administration reported Thursday — an amount equal to 1/31st of 1 percent of the General Fund — is comparable to a rounding error in the scope of the $19.7 billion overall state budget.

It was less than 1/14th the size of the $78 million deficit reported last week by the legislature’s nonpartisan Office of Fiscal Analysis.

More importantly it is only 1/23rd the size of the $133 million revenue shortfall that Malloy’s own budget office warned dozens of agency heads about on Sept. 6.

But when the administration filed its official monthly projection to Comptroller Kevin P. Lembo on Sept. 20, it opted not to report the projected revenue hole.

The $133 million revenue gap, which The Mirror disclosed in an Oct. 11 article, quickly sparked Republican charges that Malloy was hiding a deficit to help his fellow Democrats campaigning this fall to maintain majorities in the state House and Senate.

But Klarides and Fasano weren’t the only ones who balked at the conflicting reports.

Lembo, a Democrat, wrote to Barnes saying, “The contradicting forecasts deserve an explanation in order to preserve confidence in the state’s official statements.”

An administration spokesman said “extremely conservative” revenue estimates were used on Sept. 6 to encourage agency heads to be frugal with future budget requests.

Republican leaders have argued the current state budget was out of balance when Malloy and Democratic lawmakers adopted it back in May.

Shortly after the budget was approved, fiscal analysts noted that income, sales and corporation tax receipts this summer were weaker than anticipated. Since then, administration plans to save money from layoffs have progressed much more slowly than anticipated, further raising concerns about whether the new budget remains in balanced.

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