Stakes grow in Malloy’s third challenge of watchdogs’ autonomy

Starting with his first budget, Gov. Dannel P. Malloy has tried to limit the fiscal independence of the watchdog agencies responsible for enforcing how he and the rest of his administration abide by ethics, elections and open-government laws first crafted after the Watergate scandal of the 1970s.

His administration’s latest challenge to the fiscal autonomy of the watchdogs is raising legal questions likely to eventually require his fellow Democrats, Attorney General George Jepsen and Comptroller Kevin P. Lembo, to formally contradict or confirm Malloy’s position.

For the third time in six years, the administration appears to be spending political capital in pursuit of modest budget savings from the Office of State Ethics, the State Elections Enforcement Commission and the Freedom of Information Commission.

The money at stake is modest in the context of the $68.8 million the legislature authorized Malloy to cut from the $20 billion state budget: The administration is demanding $42,549 from the Office of State Ethics, $44,442 from the Freedom of Information Commission, and $96,032 from the State Elections Enforcement Commission.

But the heads of those agencies say the cuts demanded by the Office of Policy and Management not only would be crippling after years of previous cuts, but would violate a state law passed in 2004 in the last days of an ethically challenged administration to maintain the independence of the watchdogs.

The timing of the fight is especially awkward given the administration’s high-profile dealings with the ethics and elections-enforcement agencies: An ethics advisory board is expected to issue a declaratory ruling next month stating whether Insurance Commissioner Katharine L. Wade must recuse herself from the Anthem-Cigna merger, and the Democratic Party just agreed to a record $325,000 settlement to resolve allegations of fundraising improprieties in support of Malloy’s re-election.

“We remind state residents that the General Assembly put the protections in place in 2004, the last year of former Gov. John G. Rowland’s administration, because he was under investigation by the Ethics and State Elections Enforcement Commission and he proposed to gut the agencies, implement a 50 percent cut and merge them. It was widely viewed as an act of retribution,” said Karen Hobert Flynn, president of Common Cause. “Given the dispute with SEEC, Gov. Malloy’s plan to cut watchdog budgets raises the specter of the same interpretation.”

To save less than $200,000 in a budget of $20 billion, Malloy is inviting comparisons to Rowland, the twice-convicted federal felon, and he is doing so when the U.S. attorney’s office is investigating his 2014 fundraising.

“Even if Gov. Malloy could legally cut from these agencies, he shouldn’t,” said Senate Minority Leader Len Fasano, R-North Haven. “The agencies raised an appropriate objection to Gov. Malloy’s cuts. But instead of heeding their advice, he chose to object and made this into an issue that further weakens people’s trust in government in our state.”

The administration says the only relevant issue is its ability to fairly spread the pain of budget cuts across state government.

This week, the heads of the three agencies wrote to Benjamin Barnes, who oversees the budget as the secretary of policy and management, asserting that the 2004 law bars the administration from cutting its budget. With previous cuts by the legislature, they note that SEEC would be left with just $6,000 for the rest of the year for expenses other than personnel. Ethics and FOI would have about $45,000 each.

Barnes says the recently adopted budget supersedes the law by authorizing Malloy to make $68.8 million in cuts.

The budget places aid to education and other spending off limits, but not the funding for the watchdogs. And Barnes says that means the watchdogs’ budgets are fair game as the administration struggles to cope with a chronic fiscal crisis that has forced court closures, layoffs and other cuts that have touched on nearly all corners of government.

A spokeswoman for Jepsen said the attorney general’s office never has been asked to interpret the protections afforded the watchdogs by the 2004 law. Jepsen declined comment Thursday, anticipating that he is about to be asked for a formal opinion. Lembo, who is responsible for paying for expenses incurred by state agencies, said his office is conducting its own legal analysis.

Meanwhile, supporters of the watchdogs have urged the administration to stand down.

Daniel J. Klau, a lawyer who is president of the Connecticut Council on Freedom of Information, conceded that the watchdogs are not completely immune from budget cuts.

“Indeed, they have felt the severe pain of the budget ax this year. But the law does protect them from a governor’s unilateral decision to cut their budgets,” Klau wrote in a statement. “Thus, the 2004 law reflected the General Assembly’s appreciation of the importance of the watchdog agencies and the need to protect their status as independent agencies.

“Secretary Barnes apparently believes that legislation passed during the most recent legislative session effectively repealed the 2004 law.  The secretary is mistaken.  Nothing the General Assembly did last session expressly or implicitly repealed the 2004 law. The watchdog agencies remain subject to the legislature’s budget-cutting authority, but not the governor’s.”

Rep. Toni Walker, D-New Haven, the co-chair of the Appropriations Committee, also faulted the administration for the cuts, technically known as budget holdbacks.

“From Watergate to Rowland-gate, we are all too familiar with the willful destruction of the public’s trust by those in power. The watchdogs cannot face additional cuts outside of the budget process and do their jobs effectively,” she said.

The administration pushed back at Walker.

“Rep. Walker, as well as her colleagues, specifically gave the governor the authority to do holdbacks, including holdbacks to the watchdogs. She says in her press release that OPM is ‘rescinding budgeted funding,’ – but that simply isn’t correct. OPM is doing what the budget agreement requires – hold back funds from agencies to balance the budget,” said Chris McClure, an OPM spokesman. “That holdback requirement was granted to OPM by the General Assembly, including Rep. Walker. We greatly value the work of our independent watchdogs, who we’ve historically had cooperation from when it comes to budget matters.”

The Malloy administration has repeatedly moved to limit the autonomy of the watchdogs in the name of efficiency and austerity. At times, the fight has seemed personal to Barnes, the governor’s only budget chief.

In their first budget, Malloy and Barnes cut their staffs by one third and consolidated them into the Office of Government Accountability, a proposal ostensibly to jointly provide back-office support to the Office of State Ethics, Elections Enforcement, FOI and some smaller agencies. But the change also placed them under a gubernatorial appointee, albeit one with limited powers.

In 2013, Malloy proposed a further consolidation that would merge and place under the supervision of a gubernatorial appointee the legal staffs of the three autonomous agencies that oversee elections, ethics and open-government laws. Malloy would have placed the watchdogs’ finances and staffing levels under the control of the governor, erasing political protections established in the 1970s and increased over time.

Those changes were rejected by the legislature.

Barnes was unusually blunt in admitting in 2013 that it rankled to lose the battle in 2011 to rein in the watchdogs’ finances.

“I will admit that it is aggravating to have pockets of state government, which are able to operate without some of the basic periodic reviews,” Barnes told CT Mirror. “Are we doing the best job for the least resources possible? We’re trying to do that across government, and we think it should be done there, just as it’s done everywhere else. Sometimes I’m concerned the independence argument is used as a shield for other things.”

Barnes said the issue is simple oversight, making sure staff is being used to the greatest extent possible, but his language then raised eyebrows.

“Everybody’s got to work for somebody. You gotta have somebody when you don’t show up to work, when you do shitty work, when you show up drunk. Somebody’s got to be able to discipline you and fire you,” Barnes said. “We expect that public employees would be accountable to somebody who is in charge of evaluating their performance.”