The Connecticut Capitol dome visible through the skylight of the Legislative Office Building.
Gov. Dannel P. Malloy's inaugural in 2011.
Gov. Dannel P. Malloy’s inaugural in 2011. CT MIRROR
Gov. Dannel P. Malloy’s inaugural in 2011. CT MIRROR

Gov. Dannel P. Malloy is to focus on how to modernize the state’s aging web of highways, bridges and railroads in a State of the State Address as he begins his second term today, but he and the General Assembly will be facing significant fiscal challenges in 2015.

At 11:30 a.m., the governor will lead an inaugural march from the Soldiers and Sailors Memorial Arch to the State Armory, where his friend, Supreme Court Justice Andrew McDonald, will administer the oath at 1:30 p.m. His address to a Joint Session of the General Assembly is tentatively scheduled for 4 p.m.

Promised tax cuts and a big budget deficit

With the legislature’s nonpartisan Office of Fiscal Analysis projecting a $1.3 billion deficit – equal to about 7 percent – in the next state budget, finances are expected to dominate much of the upcoming session.

Malloy said repeatedly during last fall’s campaign that he would not raise taxes.

When asked by The Mirror shortly after the election whether that prohibition applied only to the governor’s budget proposal or also to any final budget signed into law this spring, the governor said: “I think that that’s – based on everything we know – that’s basically what I’ve said – yeah.”

The administration already has begun to hedge on other tax promises, though.

Malloy, who proposed new tax cuts for college students and urban businesses during the campaign, also said then that there would be no need – despite the deficit projection – to defer any other tax cuts already approved and set to begin in 2015.

These include:

  • An end to the corporation tax surcharge.
  • Restored sales tax exemptions on clothing and non-prescription medications.
  • A new income-tax credit for retired teachers.
  • And an increase in the Earned Income Tax Credit for working poor families.

Since the election, though, Malloy budget chief Benjamin Barnes has said some of this promised tax relief might have to be delayed, but would not be repealed. And the governor told Capitol reporters on Nov. 19 that, “With respect to the (corporation tax) surcharge, I’ve not taken a position.”

How to pay for transportation?

The governor has pledged to force a major debate on the future of Connecticut’s aging, clogged transportation network, and has not ruled out the restoration of tolls.

The Walk Bridge, a rail swing bridge over the Norwalk River, is shown in the open position. The Walk Bridge got stuck in the open position twice last year, disrupting rail traffic in the Northeast corridor.
The Walk Bridge, a rail swing bridge over the Norwalk River, is shown in the open position. The bridge got stuck in the open position twice last year, disrupting rail traffic in the Northeast corridor. NEC Commission

Though the state is expected to collect 40 percent more in fuel tax receipts this year than it did a decade ago – when officials ordered a series of increases – the transportation system faces many challenges.

  • The Department of Transportation has reported almost $12 billion worth of major, long-term “unfundable” projects.
  • The state has more than 410 bridges with at least one structural deficiency — 20 percent more that a decade ago.
  • Nearly $2.9 billion in financing for transportation projects has been approved — but the funds actually haven’t been borrowed and spent.
  • Although this year’s state budget technically adds funding for 103 new DOT positions, the number of full-time posts actually filled stood at 2,971 on Dec. 1, which is 111 fewer than the department had when the current budget began on July 1, and 214 below the budgeted level.

Funding for local education

It is unclear whether the funding the state sends to municipalities for education  will be spared the budget axe as the legislature works to close the state deficit.

The state has increased funding of the principle education grant for local schools by $150 million over the last four years – an 8 percent increase – while closing a deficit much larger than the one the state now faces.

One of Malloy’s budgetary principles during his first term was shielding communities from state budget deficits, and he vowed to continue that during his campaign for reelection, saying, “I won’t balance the budget on the backs of cities and towns.”

Overhauling the juvenile justice system

How the state handles children who break the law is certain to attract a lot of attention this session. A panel co-chaired by the House chairwoman of the legislature’s budget writing committee and the governor’s budget director are working to craft recommendations to overhaul the system.

This activity comes after the population of the state’s jail for juvenile offenders reached a 10-year high, a new jail was opened to house girls, and the living conditions of an incarcerated transgender teen drew criticism from child advocates.

Funding for higher education

While state funding has not kept pace with the rising costs of running the Connecticut State Colleges & Universities and the University of Connecticut, it is unclear if the governor and state lawmakers will look to higher education to help close the deficit.

Campus of Eastern Connecticut State University in Willimantic
Campus of Eastern Connecticut State University in Willimantic CT Mirror

Nonetheless, CSCU, the state’s largest public college system, is expected to ask legislators to fund several new initiatives – dubbed Transform CSCU 2020. The initiatives have been controversial, however. Faculty leaders have criticized them as vague, not focused on improving academics, and putting too much emphasis on offering courses online. Faculty pushback has drawn the attention of legislators, who held a hearing on the initiatives late last year.

Care for the developmentally disabled

With Connecticut facing a lean budget year, advocates for individuals with developmental disabilities have fractured into two groups.

Armed with a court expert’s new recommendation to accelerate the closure of Southbury Training School, several advocacy groups argued Connecticut unfairly spends too much of its resources on a small class of institutionalized disabled while ignoring thousands awaiting community-based care.

Connecticut spends $442,265 per person each year for care at the state’s five regional centers and $356,350 per person at Southbury.

But for the nearly 3,000 disabled clients cared for in privately run, community-based group homes, the state’s annual cost is about $129,114.

But parents of clients of the training school and other state facilities say these settings are crucial for their children’s proper care. Despite the big deficit looming over the next state budget, the solution for one group, they added, can’t come at the expense of another.

Regulation of hospital ownership

For the third year in a row, the state’s system for regulating changes in hospital ownership, and the future of the financially struggling Waterbury Hospital, are expected to get considerable attention from legislators, after the decision by national for-profit chain Tenet Healthcare to drop its bid to acquire Waterbury and four other Connecticut hospitals.

Financially struggling Waterbury Hospital lost its suitor Thursday.
Financially struggling Waterbury Hospital. Erin Covey / Waterbury Republican American

Last year, a last-minute legislative compromise cleared the way for Tenet to proceed with the deals, which would have made it the first major for-profit hospital chain in the state. But Tenet abruptly gave up its plans last month in response to conditions on the Waterbury sale put forward by the state Office of Health Care Access and attorney general, both of which needed to approve the deal for it to go forward.

Unions and advocacy groups wary of for-profit hospital companies celebrated the regulatory agencies’ moves, but critics said they could jeopardize the survival of community hospitals and sent a bad message about the state’s business climate.

More broadly, several top legislators have also taken an interest in other aspects of the rapidly changing health care landscape, particularly moves by hospitals to acquire physician practices and the growth in facility fees charged to patients who receive services at hospital-owned outpatient facilities. But lawmakers said it’s not yet clear how or if those issues will be addressed in legislation.

Lethal medication for the terminally ill

The controversial proposal to allow physicians to prescribe lethal doses of medicine to terminally ill patients is expected to once again come before lawmakers. For the past two years, the matter has received a public hearing but has not come up for a committee vote.

Children’s mental health care

Legislators are also likely to devote attention to children’s mental health issues, following the release of a proposal last fall to redesign the state’s system for serving children with behavioral health needs.

Campaign finance

House Speaker J. Brendan Sharkey, D-Hamden, says he wants to revisit the issue of campaign finance, saying he was troubled that the law seemed to allow publicly financed candidates to raise money for the state parties, which then can assist the candidates.

Sharkey said the ability of candidates to raise funds for parties that can then make expenditures on their behalf defeats a key element of the voluntary public financing program: strict limits on fundraising and spending.

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