With two extra weeks before his next budget is due, Gov. Dannel P. Malloy may use that time to reset legislators’ expectations rather than to check his math or fine-tune any proposals.
“How do we fulfill our promise for a brighter tomorrow?” Malloy asked legislators Wednesday in his State of the State Address. “How do we decide what kind of Connecticut we’re going to leave to our children? We do it with courage, by having the tough-but-necessary debates about our long-term prosperity.”
The Democratic governor took a different tone last year as he assured voters a big budget deficit could be solved with relative ease.
An improving economy – already factored into deficit forecasts – had been underestimated, he said. Most of the shortfall could be closed with the extra revenue that would provide, and by denying agencies inflationary increases and keeping town aid flat.
Tax hikes not only were out of the question, but a half-dozen new tax breaks were on the way for businesses, consumers, retired teachers, college students and the working poor. Municipal aid would be protected and more state employee concessions were unnecessary.
And if Malloy was optimistic in the face of the $1.3 billion deficit nonpartisan analysts saw coming in 2015-16, his GOP challenger, Tom Foley, seemed almost giddy in the face of fiscal red ink.
The Greenwich businessman promised hundreds of millions of dollars in tax cuts – mostly in the sales tax – beyond those supported by the governor.
Foley not only ruled out labor concessions and cuts to local aid. He identified very few areas in the entire budget that he would reduce.
The campaign rhetoric ended two months ago, but have voters, special interest groups – and even lawmakers – reset their expectations?
Malloy’s budget chief, Benjamin Barnes, did his best to help with that shortly after the election when he told Capitol reporters Connecticut should brace for another difficult budget.
“We have entered into a period of permanent fiscal crisis in state and local government, it seems,” he said, adding that some of the promised tax cuts might have to be delayed a year or two.
Shortly thereafter, Malloy would not rule out another postponement for the largest of the tax cuts: a 20 percent surcharge on the corporation tax.
Originally imposed in the 2012 and 2013 tax years, the 20 percent surcharge – which costs businesses about $70 million annually – later was extended for another two years through 2015.
Top Democrats on the legislature’s budget-writing Appropriations Committee made it clear this week they aren’t expecting an easy time crafting a new budget.
“We all know that there’s going to be lots of reductions” in the next state budget, Rep. Toni Walker, D-New Haven, co-chairwoman of the Appropriations Committee, said Thursday.
Sen. Beth Bye, D-West Hartford, the other co-chairwoman of the Appropriations Committee, said she’s more concerned that various constituent groups may not appreciate the financial challenge officials are facing.
“It is striking that there are still groups out there saying, ‘We need tens of millions of more dollars next year’,” she said. “Certainly we’re feeling it in our committee.”
But Deputy House Minority Leader Vincent J. Candelora, R-North Branford, said he expects Malloy to step up efforts over the next month to reframe Connecticut’s budget debate.
Yet Candelora also predicted an already cynical electorate’s opinion of state government may sink to a new low this spring.
“The fact of the matter is that the public generally has a disdain and a distrust for public officials, and I think that time is not going to improve that outlook,” Candelora said.
The North Branford lawmaker, who serves on the tax-writing Finance, Revenue and Bonding Committee, said promises to cut taxes and preserve local aid aren’t easily forgotten.
And he added that Connecticut businesses still are stinging from the hefty state unemployment tax bill they faced last summer. That tax was levied to help repay federal funds Connecticut borrowed in the last recession to keep unemployment benefits solvent.
If Malloy’s next budget maintains the business tax surcharge while postponing debt payments and increasing interest costs – two maneuvers the governor used to avoid tax hikes before the election – “that budget is presented at your own peril,” Candelora added. “It is only going to serve to agitate people, and two extra weeks won’t make them forget it.”