Posted 4/2/12

That Other Issue

GOP Leaders Cafero & McKinney
Photo by Steve Kotchko

Democratic Gov. Dannel Malloy declared 2012 the year of education reform for the state legislature, and indeed that has been the hot button topic.  Last year, of course Connecticut’s multi-billion dollar deficit kept Malloy and lawmakers preoccupied.

To remedy the money crisis, Malloy pushed a massive deficit-fighting package through the General Assembly including a highly controversial across-the-board set of tax increases.  It was all wrapped up in a two-year state budget plan.

As a rule, lawmakers would use this year’s short legislative session (it ends May 9) to make mid-course corrections in the budget, and last week, living up to their duty, the legislature’s Democrat-controlled budget-writing Appropriations Committee voted on, and sent out a $20 billion budget plan.

There was no battle royal on the budget, something we could call “that other issue” in this year of education reform, just the usual partisan posturing.

Republican legislative leaders churned out what they called an “alternative” budget.  They said it would cut state spending by more than $342 million, while offering tax relief.  GOP lawmakers proposed restoring the popular sales tax exemption on clothing items priced less than $50, increasing the maximum property tax credit back up to the old $500 rate, and bringing back the sales tax exemption for non-prescription drugs.  Those were all items lost in last year’s budget plan.

Since Democrats control the Appropriations panel, the GOP plan went down to defeat, but Republicans held a news conference on the plan and thereby gained some free media.  GOP Senate Leader John McKinney (R-Fairfield) said Malloy’s 2011 budget, with its numerous tax hikes, “has hurt families and people across the state—particularly the middle class.”

GOP House Leader Lawrence Cafero (R-Norwalk) said the Republican plan was not a political gambit.  “These aren’t just talking points (because) various members of our caucuses have spent endless hours going over every single line item.”  But the proposal was voted down anyway because Democrats rule the committee.

Appropriations Chairs
Harp & Walker

Photo by Steve Kotchko

In their own news conference, the Democratic co-chairs of the Appropriations Committee told reporters the bill that was voted on and sent out of committee was a bipartisan effort.  “Ranking members and other Republicans were routinely included in (our) meetings and many of their suggestions were built into this bill,” said committee co-chair Sen. Toni Harp (D-New Haven).  She cited as examples money included in the budget for outdoor recreational activities, and funds restored for tourism and the arts that had been cut in Malloy’s budget plan.

The Democratic chairs also told reporters that even though their budget plan is just $1 million lower than Malloy’s blueprint, there are some key differences.  This seemed to be an attempt to show that Democratic lawmakers on the committee have their own sense of spending priorities—and aren’t going to rubber stamp Malloy’s line items.

For instance, the committee plan erases mass transit fare increases totaling $3.9 million that Malloy wanted in the coming year.  They also cited the above-mentioned restoration of arts and tourism money.  They also noted that while they agree with Malloy on the need for significant education reform, the parameters differ.  Said Harp:   “We hope we can get started with educational improvement.  We’ve put money there, but just not as much as the Governor has.”

In another departure from the Malloy “vision” for state government, the Appropriations Committee put the brakes on the Governor’s proposals for merging state agencies in the name of efficiency.  Committee co-chair Rep. Toni Walker (D-New Haven) said:  “Many of them (consolidations) that we did last year still are not working.  They are still having difficulties in procurement, in hiring, and management.  The (state) auditors said the agencies are still struggling to figure out who is actually in charge, so we felt this year we should not continue with (consolidations) especially because there were no savings.”

Though the budget issue has been flying below the radar, there is a chance it could return to the spotlight by late April.  The reason?  New deficit worries.  State officials and lawmakers will be waiting anxiously for reports from the Department of Revenue Services after the April tax deadlines hit.

For months now, the Malloy administration and other budget watchers have been nervous about weak tax revenues despite last year’s hefty tax hikes.  If that negative trend continues or worsens after April 15, the Governor and lawmakers may have to drop what they’re doing (including education reform) and snap into action on deficit issues.

On March 27, Malloy sent his commissioners a letter stating that while last year’s budget adoption “put the state on a path of fiscal sustainability by closing a $3 billion shortfall,” further corrective action may be needed.  For one thing, Malloy vowed to bring the state into alignment with Generally Accepted Accounting Principles (GAAP) and that will cost about $75 million.  He won’t back down from the commitment.

So Malloy cracked the whip in front of state agency heads yet again, telling them to get set for more spending cuts.  Said the Governor:  “I am directing each of you to review your agency’s planned spending in order to eliminate, minimize or delay those expenditures that are not absolutely critical in nature.”

Perhaps to take the hard edge of that communiqué Malloy told his team at the monthly commissioners meeting:  “No one’s hair is on fire, the world’s not coming to an end, but to the extent that you all can be helpful in giving us insurance (trimming spending), I would appreciate it.”

It is possible the recovering economy might produce pleasant surprises in the tax receipt reports—maybe a nice surplus.  However, if revenues remain weaker than hoped, the Governor stated:  “If April tax collections miss our targets, and (agency) expenditure reduction measures are insufficient, I intend to direct (the budget office) to prepare a deficit mitigation plan for the legislature in May.”

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