Malloy recognizes his budget proposal is $121M out of balance
Gov. Dannel P. Malloy has said repeatedly that all of the budgets legislative caucuses have proposed are so flawed he would veto them.
But the Malloy administration conceded this week that there are some holes in the governor’s budget as well — worth more than $120 million.
The $40.6 billion, two-year budget Malloy unveiled on May 15 effectively assumes $46.7 million in labor savings in the first year and $74.5 million in the second that the administration now acknowledges it can’t achieve — at least as originally planned.
Why? Because those cost-saving measures — which largely involve reducing staff and closing and consolidating facilities — would require layoffs that would be prohibited for four years under the concessions deal pending before state employee unions.
And the governor’s budget relies on the assumed savings from that deal, about $1.6 billion over two years combined, to remain in balance.
In other words, the governor can’t achieve both the concessions savings and the $121.2 million that would come from staff reductions and closures and consolidations.
This contradiction was outlined in a series of cost estimates the administration delivered over the past week to legislators through their nonpartisan Office of Fiscal Analysis.
“Yes, I would say the governor’s plan needs work,” said Senate Republican leader Len Fasano of North Haven, who initially requested the analysis of whether Malloy’s budget relied on contradictory savings assumptions.
“He should, like he’s asked all of us — either amend his budget to deal with the $121 million, or he should say his plan is no longer a valid budget that can be voted on,” Fasano added.
“For weeks Governor Malloy has dismissed Republican budgets as being irrelevant, unbalanced, or unworkable and threatened to veto them,” House Minority Leader Themis Klarides, R-Derby, said. “It now appears there is more work to be done on the governor’s plan.”
Chris McClure, spokesman for the governor’s budget office, said the tentative concessions deal was reached after the governor’s May 15 budget was released. “Therefore we could not prepare for all of the eventualities of that agreement,” he said.
But legislative leaders dismissed any suggestion that the administration didn’t know on May 15 that the tentative concessions agreement Malloy would announce just eight days later wouldn’t include a no-layoff provision.
Administration officials had been in concessions talks with unions for six months before that announcement, had disclosed the $1.6 billion, two-year savings target back in February, and had included a no-layoff provision in the previous concessions deal it struck in 2011.
McClure added that the administration provided “the requested information to legislators so that their proposals could be adjusted to reflect any revisions necessitated by the labor agreement. We are eager to work with the legislature to develop and pass a budget.”
Malloy has been critical of Democrats and Republicans in both the House and Senate for their inability to craft a new state budget before the fiscal year began on July 1.
A combination of shrinking revenues and surging retirement benefit and other debt costs means state finances, unless adjusted, are projected to run $2.3 billion — or 12 percent — in deficit this fiscal year. The gap grows to $2.8 billion or 14 percent in 2018-19.
“Let me be very clear: If the Republican budget had been passed, I would have vetoed it,” Malloy told Capitol reporters on June 8, one day after the regular 2017 General Assembly session had ended. “If the Democratic outline passed, I would veto it.”
The Democratic governor has been at odds with House and Senate Republicans, each of which have offered separate budgets that achieve major labor savings. But unlike Malloy’s plans, the GOP proposals don’t rely on negotiated concessions, but rather would freeze pay and trim future benefit costs by legislating changes to labor laws.
The governor, whose administration was involved in concessions talks with unions between November and mid-May, has said he won’t consider making changes outside of negotiations while the concessions deal is pending. Unions expect to complete voting on those proposed givebacks Monday.
The governor also has clashed with his fellow Democrats in the legislature.
He criticized a budget proposal from House and Senate Democrats in mid-May that would have legalized and taxed recreational marijuana use, stripped reserves from the state’s cash-strapped transportation program, and funded ongoing programs with a big, one-time casino licensing fee.
Malloy also criticized a House Democratic plan released in late June that raised sales and hotel tax rates to mitigate cuts to municipal aid.
Similarly, Democratic and GOP lawmakers have criticized Malloy’s budget proposals for trying to shift hundreds of millions of dollars of teacher pension costs onto cities and towns.
Senate President Pro Tem Martin M. Looney, D-New Haven, said this week that Senate Democrats are aware of the imbalance in the Malloy plan. “We have already accounted for the projections provided by (the governor’s budget office) and have incorporated them into our caucus’ work on a balanced budget,” he said.
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