The General Assembly overwhelmingly adopted a bipartisan plan Tuesday afternoon to close most or all of the current year’s budget deficit, immediately shifting the legislature’s focus to a far larger projected shortfall for the fiscal year beginning July 1.
The House of Representatives voted 127-16 just before 3:45 p.m. to approve the plan, roughly 90 minutes after the Senate adopted it 33-3. Nine Democrats and seven Republicans opposed the plan in the House. One Democrat and two Republicans voted against it in the Senate.
While the legislation eliminates $220 million in red ink in the budget year that ends June 30, it technically doesn’t reduce much larger shortfalls on the immediate horizon. Resources from off-budget accounts and other one-time sources of revenue covered 40 percent of the deficit-mitigation effort, or $87.2 million.
“This is to be celebrated I think for a day, then the hard work of the changes to the 2017 budget will be upon us,” Gov. Dannel P. Malloy told reporters as the House votes were being tallied.
Most of the remaining $133 million in cuts involved various small reductions applied to programs only for this fiscal year. Still, some legislators said many of those cuts will be employed again when the 2016-17 budget is adjusted later this spring.
Lawmakers expect hospital funds to be released
Still, leaders of the Democratic majority and the Republican minority hailed the plan. They argued it closes the current shortfall, mitigates future deficits and should trigger the release of $140 million in payments owed to hospitals that the Malloy administration has withheld in recent months.
“Today’s bipartisan agreement once again demonstrates that Democrats were willing to compromise in a way where we didn’t abandon our principles of protecting our investments in property tax relief, community hospitals, education, transportation and the safety net,” Senate President Pro Tem Martin M. Looney, D-New Haven, and Senate Majority Leader Bob Duff, D-Norwalk, wrote in a joint statement.
“This bipartisan package will preserve funding for the most vulnerable in the state, protect our towns from painful cuts, restore funding to our hospitals to care for the sick and elderly, and make the appropriate level of cuts to balance the budget and initiate savings for future years,” said Senate Minority Leader Len Fasano, R-North Haven.
Gian-Carl Casa, a spokesman for Malloy’s budget office, said the administration is on board with the new deficit-mitigation plan and would release the hospital funds.
But Rep. Craig Miner, R-Litchfield, said he’s still worried hospitals might not receive the funds if state finances take another turn for the worse, possibly in late April when state income tax revenues are analyzed again.
“It would be an awful message (to hospitals and their host communities) if the administration did not resume those payments,” Miner said.
Miner asked Rep. Toni Walker, D-New Haven, co-chair of the budget-writing Appropriations Committee, if Malloy administration officials had assured her the hospital funds would be released.
“We have not received that,” Walker replied.
The Connecticut Conference of Municipalities expressed relief that municipal aid wasn’t cut, given the lateness in the fiscal year.
“All spending cuts are difficult, but sparing towns from more mid-year cuts is a evidence of a strong partnership between the state and local governments, and a real recognition of the interdependence of the state-local tax system when setting the tax burden on our residents and businesses,” said Joe DeLong, the group’s executive director.
New plan replaces Malloy’s emergency cuts
The deficit-mitigation plan legislators were expected to adopt Tuesday would replace reductions the governor ordered unilaterally March 16.
Most of the reductions in the legislators’ plan involve small cuts spread across most segments of the state budget. But like past mitigation efforts, they fell disproportionately on social services and higher education — two areas where spending is not locked in tightly by contract.
Still, the legislators’ plan significantly reduced cuts Malloy made earlier this month to social service agencies, particularly those serving people with intellectual or developmental disabilities and people with mental health or addiction issues.
While Malloy cut $17.2 million from the Department of Developmental Services, the legislative plan would cut $3.4 million. The legislative plan would not cut any funding from employment opportunities or day services for people with intellectual or developmental disabilities (Malloy had cut $4.6 million), and reduced Malloy’s $9.7 million cut to community residential services to $900,000.
However, the legislators’ plan would increase the projected savings from the department’s salary account from $1.5 million under Malloy’s cut to $2 million.
The deficit-mitigation plan would cut $2.2 million from the Department of Mental Health and Addiction Services, restoring nearly $5 million from Malloy’s mid-March cut. A $1.9 million cut Malloy made to grants for mental health and substance abuse treatment providers was reduced to $163,131 as part of the legislative plan.
Connecticut Children’s Medical Center in Hartford would see a $350,000 reduction under the plan, compared to a $730,275 cut Malloy issued March 16. The Hartford children’s hospital had been expected to receive more than $14 million from the state this fiscal year.
The deal would also reverse a nearly $4 million cut in state and federal funding to community health centers, made as part of Malloy’s March 16 cuts.
A cut to the state’s nearly $2.5 billion Medicaid account comes from a re-estimation of expenses in the program this fiscal year, rather than any policy changes aimed at cutting costs.
The state’s public universities and colleges were also cut; the University of Connecticut by $4.73 million and the four regional Connecticut State Universities and community colleges by $1.6 million. Officials at each of those college systems have both implemented strict hiring controls to reduce costs.
Funding for education was hit $9.2 million. Those cuts will come from the state-run vocational-technical high school system ($2 million), low-achieving schools that are part of the Commissioner’s Network ($1.1 million) and charter schools not enrolling as many students as originally budgeted ($1 million).
Programs that offer child care and early education were cut by $2.7 million, which will be absorbed primarily by not filing spots as they become vacant.
Sen. Danté Bartolomeo, the co-chair of the committees that oversee higher education and the state’s child welfare agency, the sole Democrat to vote against opposed the budget fix in the Senate, spoke out against cuts that would affect the homeless, abused and neglected children, college students and disabled residents.
“They have been cut and cut and cut,” Bartolomeo said on the Senate floor. “There are options that I would prefer.”
Those options included retreating from big Democratic initiatives passed last year to dedicate sales tax receipts for transportation and municipal aid.
“We thought we could protect our safety net and afford these initiatives,” she said. “In order to afford this new spending, services to people are being eliminated. So funding these new initiatives means funneling 1 percent of the sales tax revenue away from the General Fund… I cannot cut life-sustaining services to my constituents in order to pay for new initiatives in a time that I do not believe we can afford them.”
Malloy told reporters that he thinks the safety net has not been shredded by these cuts.
“I think we struggle to support our safety net on a constant basis and I think that we are doing a pretty go job of that, for instance with respect to rescissions made and cuts made in special session,” he said. “We have gone to extraordinary lengths to protect the safety net and we’ll continue to do that.”
House leaders embrace plan as well
House Democratic and Republican leaders also held a joint press conference around mid-day on Tuesday to emphasize the bipartisan approach to the current-year deficit, but House Minority Leader Themis Klarides, R-Derby, warned plenty of fiscal issues still divide the parties as they try to reach an agreement on how to solve a bigger shortfall in next year’s budget.
“You’ve heard us stand up, both sides of the aisle, and talk about how we don’t agree with this or we don’t agree with that. And there’s certainly more of that to come. Don’t be disappointed,” Klarides said. “Listen, we’re in a very difficult situation. We have different opinions and thoughts on how to handle it, and I ‘m sure there’ll be more disagreements to come, but I certainly hope there are more days like today.“
More budget solutions needed
House Speaker J. Brendan Sharkey, D-Hamden, and Klarides each said agreeing on a deficit-mitigation plan was easy compared to the task ahead.
They acknowledged that the plan, which relies on budget revisions that are one-time savings, does little to lower the projected shortfall next year.
“This package does not have a lot of that in it,” Sharkey said.
“There’s much bigger fish to fry going forward, Klarides said.
The bipartisan plan did not incorporate some controversial reductions that Republicans and Democrats had proposed including:
- Furlough days for state employees, which could not have been implemented without negotiations with worker unions.
- A $16.7 million reduction in municipal aid.
- And a 10 percent salary cut for all legislators.
Fasano said he still believes a legislative pay cut is important.
Republican lawmakers were the first to call for major restructuring of worker benefits and other labor costs, and the minority leader said Connecticut leaders cannot coax workers to the table if they don’t set the right example.
“That’s the reason we put it out there,” Fasano said.“But we couldn’t find a consensus for that idea” in negotiations with Democratic legislators.
“We’re going to be in big trouble,” in future years, Fasano said during the Senate debate in which he urged lawmakers to find ways to restructure labor costs. “This is not enough.”
The state’s chief business lobby, the Connecticut Business and Industry Association, thanked legislators for their efforts, but said they need to reduce spending more now given the huge deficits to come.
“Specifically we need to adopt structural spending reforms that could bring about more effective programs and do so more efficiently, said Bonnie Stewart, CBIA’s general counsel. “This year, it was said by many people that tough choices need to be made, and unfortunately, that’s true. What’s also true, though is that those decisions need to be made this year to show that Connecticut is taking our fiscal situation seriously and that Connecticut is a place in which to invest.”
Tuesday’s votes may not even have closed the entire deficit for this fiscal year.
While the Malloy administration estimated the shortfall at $220 million, the legislature’s nonpartisan Office of Fiscal Analysis says it is slightly larger at $247 million.