Faced with worsening economic news, Gov. Dannel P. Malloy tried Tuesday to frame his approach to the next state budget as a frugal one.

The Democratic governor, who used his monthly commissioners’ meeting to highlight numerous efforts to streamline government and control spending, wouldn’t rule out a return to tax increases.

But Republican legislators disputed the governor’s claim of frugality, noting that spending grew nearly 5 percent in the first full fiscal year under his command.

“Unfortunately, the economy has not grown as much as we would like it to,” Malloy told his agency heads. “It’s going to be a tough budget year.”

Two reports issued this past summer by the University of Connecticut painted a gloomy picture for the state’s sluggish recovery from the last recession, including an estimate that the state might not recover all jobs lost in the last downturn until 2018.

“We’re making government more efficient, but we’ve got to keep going,” Malloy said. “We still have a long, long, long way to go. I know it.”

Still, the governor insisted that he has made progress since taking office in January 2011.

A report from his budget agency, the Office of Policy and Management, noted that overall spending growth in the first biennial budget of the Malloy administration is just 3.3 percent — a conditional claim that made Republican legislators roll their eyes. The administration also spends about $2 billion less than the amount Malloy’s predecessor, Gov. M. Jodi Rell, had estimated would be needed to maintain current services between 2011 and 2013, the OPM reported.

Malloy’s budget director, OPM Secretary Benjamin Barnes, noted that the administration has taken several steps to control costs over the long term.

  • Unfunded liabilities in state employee pension and retirement health care programs have been reduced through a union concession agreement;
  • The executive branch full-time payroll, excluding higher education, has been reduced by 5.4 percent and 1,624 employees between January 2011 and July 2012;
  • The number of executive branch manager positions has been reduced 14.4 percent;
  • And the number of state agencies has been shrunk from 81 to 60.

Malloy’s commissioners also outlined several steps they and their staffs have taken to streamline government:

  • The Department of Energy and Environmental Protection used new technology to reduce processing time for inspecting underground fuel storage tanks from 47.6 days to 1.4 hours;
  • The Department of Administrative Services saved more than $643,000 by using common software and consolidating other technology services;
  • The Department of Revenue Services collected an extra $6 million in overdue taxes, other revenue and penalties using a new data-based analysis to prioritize the largest and most likely to be recovered delinquent accounts;
  • State police cut costs by allowing troopers to refuel their cruisers at Department of Transportation fuel stations, cutting travel time. Administrators also have hired civilians to perform more tasks, freeing troopers trained for hazardous duty to return to those roles, saving $720,000.

But Republicans were quick to put their perspective on the governor’s claim.

“He’s made a lot of mistakes, but his biggest mistake is taking the people of Connecticut for being a lot less intelligent than they really are,” said state Sen. Andrew W. Roraback of Goshen, the ranking GOP senator on the Finance, Revenue and Bonding Committee.

Though it was less than the level needed to maintain current services, overall spending rose 5.5 percent during the 2011-12 fiscal year, the only full budget year the Malloy administration has completed to date. Overall spending rose then from just under $19.2 billion to more than $20.2 billion.

And while the administration’s estimate for two-year spending growth stands at 3.3 percent, that uses the 1.6 percent spending increase the legislature authorized for this year to offset the 5.5 percent increase in 2011-12.

More importantly, it also assumes the administration will stay within the approved budget this fiscal year —  which began in July and still has nine months to go.

“Today’s ‘show and tell’ from his commissioners did little to change anything,” said House Minority Leader Lawrence F. Cafero, R-Norwalk. “Any real savings and positive changes would have been reflected in the state budget and that simply did not happen.”

The administration spent about $80 million more than the original budgeted bottom line last fiscal year, which closed with a $143 million deficit despite more than $1.5 billion in new state taxes and fees. And last week it estimated that the current budget is $27 million in the red.

And a larger potential fiscal hole — in the hundreds of millions of dollars — looms over the 2013-14 fiscal year. The governor, whose staff will begin work this fall on the next budget plan, must tell legislators in February how he will deal with that.

Fiscal analysts were projecting a $424 million hole in 2013-14 finances before Malloy and the legislature agreed last May to slice $186 million off the spending the governor originally proposed for this year.

But even as they were scaling back spending for this year — which in turn would reduce a potential deficit in 2013-14 — analysts also downgraded revenue expectations for 2013-14 by $311 million.

When asked if he would consider proposing tax increases in February, Malloy said, “I hope not. I think we’re waiting to fully understand what growth rates are likely to be produced.”

“The people of Connecticut know that you don’t have the biggest tax increase ever, increase spending year after year, and then proceed to pat yourself on the back,” said Roraback, who also is a candidate for U.S. House in the 5th District.

“Andrew Roraback’s congressional campaign isn’t going well, so I understand he’s in a bad mood,” said Malloy’s senior adviser, Roy Occhiogrosso. “What Andrew knows about running state government could fit on the head of a pin, with a lot of room left.

“Andrew stood idly by as state government became bloated and broken over the past generation, and did nothing about it,” Occhiogrosso said. “Probably because he wouldn’t know what to do even if he had a manual entitled ‘Here’s How You Fix State Government.’ Andrew insults his own intelligence with these kind of inane remarks. Also, he should read the report before he comments publicly on it.”

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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