Free Daily Headlines :

  • COVID-19
  • Vaccine Info
  • Money
  • Politics
  • Education
  • Health
  • Justice
  • More
    • Environment
    • Economic Development
    • Gaming
    • Investigations
    • Social Services
    • TRANSPORTATION
  • Opinion
    • CT Viewpoints
    • CT Artpoints
DONATE
Reflecting Connecticut’s Reality.
    COVID-19
    Vaccine Info
    Money
    Politics
    Education
    Health
    Justice
    More
    Environment
    Economic Development
    Gaming
    Investigations
    Social Services
    TRANSPORTATION
    Opinion
    CT Viewpoints
    CT Artpoints

LET�S GET SOCIAL

Show your love for great stories and out standing journalism

Malloy: Next budget will be very lean, without major tax hikes

  • Labor
  • by Keith M. Phaneuf
  • November 15, 2016
  • View as "Clean Read" "Exit Clean Read"
Gov. Dannel P. Malloy discusses his upcoming state budget proposal with reporters.

Mark Pazniokas :: CTMirror.org

Gov. Dannel P. Malloy discusses his upcoming state budget proposal with reporters.

Despite debt costs that are surging at unprecedented rates, Gov. Dannel P. Malloy said Tuesday his proposal for the next state budget probably will not call for any major tax hikes.

With state finances currently on pace to run about $1.5 billion in deficit next fiscal year, Malloy’s plan is expected to recommend deep cuts to spending not fixed by contract.

The Democratic governor did not rule out small tax hikes, but also said he was considering tax incentives to spur business growth.

If you’re asking, ‘Am I leading with the expectation that we’re going to raise a lot of additional dollars, then the answer is ‘no,’” the governor said.

But he noted that, “There are tax changes that I’d like to see that are beneficial to the business climate of the state.”

Malloy, who spoke with Capitol reporters after a State Bond Commission meeting, warned that Connecticut faces “gigantic challenges” as it tries to compensate for surging debt costs — most caused by seven decades of inadequate saving for public-sector retirement benefits. And “it will require adjustments to be made in other parts of the budget.”

Reports detailing all of those surging debt costs — from the administration and from the legislature’s nonpartisan Office of Fiscal Analysis — are due to lawmakers by the close of business Tuesday.

The Mirror reported on one of those surging debt costs earlier this month. Connecticut’s contribution to the teachers’ pension system, which stands at just over $1 billion this fiscal year, must grow by 28 percent, or more than $282 million, next fiscal year. Roughly 70 percent of that cost involves catching up on contributions and investment earnings not made or achieved in the past.

Those surging debt costs, coupled with new projections showing revenues aren’t growing as quickly as state officials had hoped, are one of the major factors behind a projected hole in state finances of about 8 percent in the next fiscal year.

Malloy, who approved tax hikes worth more than $1.8 billion in 2011 and more than $650 million in 2015, said he believes his predecessors deserve most of the blame for those.

“Most people out there think I’ve increasing spending dramatically for what they otherwise would consider to be optional expenditures, and nothing could be further from the truth,” Malloy said.

“Over the course of my administration, we’ve had to pay the bills of other administrations, and that continues to drive our expenditures,” the governor said. “I don’t believe people understand that a lack of paying the bills as they should have been paid (in decades past) has led to the current difficulties the state of Connecticut is living with.”

Connecticut saved nothing between 1939 and 1981 for pensions promised to public school teachers. And even after it began saving for this benefit, the state did not regularly save the full amount necessary until 2008.

Similarly, state employees’ pensions were established in 1939 and nothing was saved until 1971. No significant savings effort began until the mid-1980s, and that was undercut by a deal with unions in 1995 that allowed Connecticut to defer significant funding. The state undid that deal and went back to full savings in the 2012-13 fiscal year.

And when it comes to retirement health care for state employees, Connecticut has saved less than 1 percent of the funds it needs to cover about $20 billion in long-term obligations. Current employees contribute about 3 percent of their pay toward retirement health care, but this covers only a portion of the long-term cost, meaning Connecticut still is promising some benefits for which it is not fully saving.

“I get it; I ran for this office,” he added. “It would have been great fun to be governor and not have to pay the bills, and I know other governors enjoyed that.”

Malloy, who first proposed in November 2014 that Connecticut try to restructure its payment schedule into the state employees pension fund, said Tuesday that it must be resolved in the coming year.

The administration estimated that the annual contribution to the state employees pension fund, which currently tops $1.5 billion, could spike to more than $6.6 billion by the mid-2030s. After that, though, the annual payment would drop drastically to about $300 million.

But Malloy and others argue no state budget can afford the quadrupling of this one line item over the next two decades.

The governor’s staff is in talks with state employee unions to see if Connecticut can defer a portion of those payments. This would reduce the spike somewhat, but also would mean the state would have to make larger payments in the late 2030s and into the 2040s.

Restructuring also would increase the overall cost to the state, since it would leave less pension contributions available for investment over the next two decades.

Sign up for CT Mirror's free daily news summary.

Free to Read. Not Free to Produce.

The Connecticut Mirror is a nonprofit newsroom. 90% of our revenue comes from people like you. If you value our reporting please consider making a donation. You'll enjoy reading CT Mirror even more knowing you helped make it happen.

YES, I'LL DONATE TODAY

ABOUT THE AUTHOR

Keith M. Phaneuf A winner of numerous journalism awards, Keith Phaneuf has been CT Mirror’s state finances reporter since it launched in 2010. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 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. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut.

SEE WHAT READERS SAID

RELATED STORIES
With billions in federal relief on the way to CT, legislators assert their role in deciding how to spend it
by Keith M. Phaneuf and Mark Pazniokas

With an unusual bill, state legislators are reminding Gov. Ned Lamont they have significant role in disbursing federal coronavirus relief.

Rep. Patricia Billie Miller wins vacant Senate seat
by Mark Pazniokas

Rep. Patricia Billie Miller, D-Stamford, won a special election to the state Senate.

CT hasn’t started collecting new payroll tax from state workers
by Keith M. Phaneuf

Connecticut established a new payroll tax surcharge on Jan. 1 but still isn't deducting it from state workers' paychecks.

Lamont’s budget offers another round of tax amnesty
by Keith M. Phaneuf

Gov. Ned Lamont’s proposal waives penalties and caps interest at 3% over each of the next two fiscal years.

Final passage of ‘Crown Act’ comes on unanimous vote
by Mark Pazniokas

With a unanimous vote, Connecticut became the latest state to adopt legislation prohibiting discrimination based on hairstyles associated with race.

Support Our Work

Show your love for great stories and outstanding journalism.

$
Select One
  • Monthly
  • Yearly
  • Once
Artpoint painter
CT ViewpointsCT Artpoints
Opinion The Board of Regents’ changes must not shortchange its students or faculty
by Carrie Andreoletti, PhD

As a university professor and a lifespan developmental psychologist, I tend to approach my work from a developmental perspective. This means I aim to foster a lifelong love of learning and to help others find a sense of meaning and purpose, as well as confidence in their ability to reach their goals. My approach to higher education is shaped by my desire to provide the best possible education for my students. This is why the recent Board of Regents’ proposed changes at the four state universities have me worried.

Opinion How to close schooling opportunity gaps created by the pandemic
by Carol Gale

We ask school district leaders to trust your public servants whose daily work life involves assessing student needs and planning or modifying instruction to meet those needs. Listen to their voices, as we have, and allocate precious resources on interventions that will offer increased opportunities for Hartford students to succeed.

Opinion A new guide for schools: How to work with families this spring
by Michael Arrington and Erika Haynes

With months of remote and hybrid learning to go, families and educators continue to adapt and innovate to meet the moment. Since August, we’ve spoken with hundreds of parents, caregivers, family support groups, educators, and students across Connecticut and the country about things things that have worked --strategies, big and small, that have made this time more manageable and helped children learn and stay connected with peers.

Opinion Housing is a human right
by Tenaya Taylor

Nonprofit Accountability Group is a queer- and trans-led group based in Hartford that is dedicated to creating racial equity by directing resources to Black, Indigenous and People of Color (BIPOC) and disabled children and families. NAG was founded in 2020 as an organization with a transformative approach to implementing nonprofit accountability by creating relationships within the community, nonprofits, and their funders.

Artwork Grand guidance
by Anne:Gogh

In a world of systemic oppression aimed towards those of darker skintones – representation matters. We are more than our equity elusive environments, more than numbers in a prison and much more than victims of societal dispositions. This piece depicts a melanated young man draped in a cape ascending high above multiple forms of oppression. […]

Artwork Shea
by Anthony Valentine

Shea is a story about race and social inequalities that plague America. It is a narrative that prompts the question, “Do you know what it’s like to wake up in new skin?”

Artwork The Declaration of Human Rights
by Andres Chaparro

Through my artwork I strive to create an example of ideas that reflect my desire to raise social consciousness, and cultural awareness. Jazz music is the catalyst to all my work, and plays a major influence in each piece of work.”

Artwork ‘A thing of beauty. Destroy it forever’
by Richard DiCarlo | Derby

During times like these it’s often fun to revisit something familiar and approach things with a different slant. I have been taking some Pop culture and Art masterpieces and applying the vintage 1960’s and 70’s classic figures (Fisher Price, little people) to the make an amusing pieces. Here is my homage to Fisher -Price, Yellow […]

Twitter Feed
A Twitter List by CTMirror

Engage

  • Reflections Tickets & Sponsorships
  • Events
  • Donate
  • Newsletter Sign-Up
  • Submit to Viewpoints
  • Submit to ArtPoints
  • Economic Indicator Dashboard
  • Speaking Engagements
  • Commenting Guidelines
  • Legal Notices
  • Contact Us

About

  • About CT Mirror
  • Announcements
  • Board
  • Staff
  • Sponsors and Funders
  • Donors
  • Friends of CT Mirror
  • History
  • Financial
  • Policies
  • Strategic Plan

Opportunity

  • Advertising and Sponsorship
  • Speaking Engagements
  • Use of Photography
  • Work for Us

Go Deeper

  • Steady Habits Podcast
  • Economic Indicator Dashboard
  • Five Things

The Connecticut News Project, Inc. 1049 Asylum Avenue, Hartford, CT 06105. Phone: 860-218-6380

© Copyright 2021, The Connecticut News Project. All Rights Reserved. Website by Web Publisher PRO