Within minutes of Gov. Dannel P. Malloy’s announcement Thursday that he wouldn’t seek a third term, speculation began over whether it would weaken his position with legislators, employee unions and other interest groups.
Malloy won’t have to wait long for his first test.
In the coming days, the governor is expected to receive alternative solutions from legislators on how to solve the latest budget crisis.
Shortly after Tuesday’s income tax filing deadline, the administration and legislators will learn if eroding revenues — a problem throughout much of his tenure — will plague the next budget as well.
And Malloy himself acknowledged last week that time is beginning to run short for concessions talks with unions to bear fruit.
“Dan Malloy is not going to be any type of lame duck,” said Senate Majority Leader Bob Duff, D-Norwalk. “He’s going to work hard. … He continues to make decisions that aren’t always politically expedient but that are good long-term decisions for the state of Connecticut. So I imagine on Monday he will continue to be the same Dan Malloy that he was today.”
New state Auditor Rob Kane, who bumped heads with the Democratic governor on several occasions in recent years as the ranking Republican senator on the Appropriations Committee, said Malloy’s effort won’t be an issue.
“I certainly did not agree with the governor very often, if at all, but I certainly respect his work ethic and the amount of time he put in. He certainly was right when he said nobody’s going to out-work him.”
But is hard work enough for Malloy to get his way when it comes to solving $3.6 billion in deficits projected for the next two-year state budget?
The governor, who wants spending cuts to be the primary solution to that huge deficit, was openly frustrated by his own party just one year ago when Democratic lawmakers wouldn’t give him many of the spending reductions he sought.
And when they did cut spending, they chopped $50 million out of arguably the biggest initiative of Malloy’s second term, a major transportation infrastructure rebuild.
So what happens now that legislators know the governor has only 20 months left on the job?
“I don’t think it makes much of a difference,” said political consultant Roy Occhiogrosso, a friend of the governor’s and key coordinator of Malloy’s successful 2010 and 2014 campaigns. “From Day 1 of his administration he’s had no problem rattling people’s cages.”
Occhiogrosso also served in Malloy’s administration for most of the first term as the governor’s senior policy advisor.
The governor, who has struggled with low voter-approval ratings through much of his tenure, repeatedly says he is unafraid of the criticism that comes with tough decisions.
But House Minority Leader Themis Klarides, R-Derby, said that while “the governor has always marched to his own tune,” the challenges he faces would be difficult to resolve even were he still in play for the 2018 gubernatorial election.
After losing many seats in the House and Senate last November, Democratic legislators are more wary of voter frustration than they were one year ago.
Democrats hold a slim 79-72 edge in the House while the Senate is deadlocked 18-18.
“The Democrats in the legislature are in a horrific position right now,” Klarides said. “The numbers are bad.”
State finances, unless adjusted, will run $1.7 billion in deficit next fiscal year and $1.9 billion in the red in 2018-19, according to the Malloy administration. Both numbers are worse than the $1 billion projected gap Democratic legislators struggled to close one year ago as they geared up for the 2016 state elections.
Both parties already have expressed opposition to one of Malloy’s key solutions to the new projected deficits — shifting one-third of the annual contribution to the municipal teachers’ pension fund to cities and towns.
That would cost communities a total of $407 million next fiscal year. But pension costs, because of decades of inadequate state contributions, are projected to skyrocket by 525 percent over the next 15 years. Local leaders note they could face a pension bill topping $2 billion by 2032, adding this would cripple local budgets statewide.
The legislature’s Appropriations and Finance, Revenue and Bonding committees are expected to unveil their spending and revenue plans, respectively, at the end of this week or early next.
The Republican caucuses also are expected to offer an alternative budget after the committees issue their reports.
Meanwhile, fiscal analysts for Malloy and the legislature are tracking receipts from the state income tax and other levies. They must project by April 30 how much the existing tax and fee system is likely to deposit into the state’s coffers over the next two fiscal years.
Since the last recession ended seven years ago, Connecticut has received much more fiscal bad news than good in April.
And the little news that’s been available recently also has been subpar. The legislature’s nonpartisan Office of Fiscal Analysis downgraded its projections for this year’s income tax collections by $60 million.
If that trend holds after the April numbers are analyzed, analysts probably would lower expectations for income tax receipts in the next fiscal year.
Perhaps the biggest wildcard in the budget debate is Malloy’s ongoing negotiations with employee unions.
The governor is asking workers to grant concessions worth $700 million next fiscal year and $869 million in 2018-19.
And while the unions have been talking, their leaders have said repeatedly in recent years that state officials’ chief solution should be tax increases on wealthy households and corporations.
They also balked at $85 million in tax incentives and other assistance Malloy secured to keep two large hedge funds in Connecticut.
Immediately after his announcement last Thursday, Malloy warned those who think he will be relegated to the political backseat that they do so at their peril.
Not being burdened by the 2018 campaign “probably makes it harder for others” and not for himself, the governor said. “ … Every single day I expect that myself and my staff will be working very hard.”
But when asked specifically about whether he would be able to get major givebacks from the unions, Malloy was less defiant.
“I’m hopeful but, you know, we’ve been at it — unofficially — since November and we don’t have an agreement in place,” he said. “And we’re asking a lot.”
Still, without mentioning the word “layoffs,” the governor offered an after-thought that made clear he would not accept failed concessions talks easily.
“I don’t even think I need to assure you,” he added, “I will act.”