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Malloy Proposes Plan To Balance State Budget

Legislative Leaders And Governor To Meet Monday

By DANIELA ALTIMARI

December 07, 2012

Gov. Dannel P. Malloy handed the General Assembly a strategy to reduce the state budget deficit by $243 million Friday, slicing deeper into programs that serve children and the needy.

Malloy and legislative leaders are trying to plug a projected $415 million shortfall for the current fiscal year. The governor has already made $170 million in rescissions to the $20.5 billion state budget.

The governor's new "road map to deficit mitigation'' offers few signs of specific programs that will be cut, although the departments of social services, education and correction all face significant reductions under the new plan. The details will be hammered out next week in closed-door meetings between Malloy and Democratic and Republican leaders from the General Assembly in advance of the Dec. 19 special legislative session.

"We believe we are making a sincere, good-faith effort to come to a bipartisan agreement to balance the budget,'' said Ben Barnes, the Malloy administration's budget czar.

The proposal "lets people know we are serious ... and have been giving significant, detailed thought on how to close the deficit,'' Barnes said. "We have some alternatives that we're prepared to put on the table. ... We assume the Democrats and Republicans in both chambers will also have some ideas."

Malloy, a Democrat, has said repeatedly that he does not intend to raise taxes to eliminate the deficit.

However, the framework released Friday employs a number of budgetary maneuvers to boost revenue, among them closing a tax loophole for electricity generation, which would bring in $10 million; revising the corporate tax credit cap to raise $12 million; and changing the way the stem cell program is funded by using borrowed funds instead of funding it through the budget, netting another $10 million.

The plan also anticipates raising an extra $8.5 million by cracking down on tax fraud. Kevin Sullivan, commissioner of the state Department of Revenue Services, said the state intends to buy an automated program that will help it track down tax cheats, including those hard-to-find cases involving scofflaws who no longer live in Connecticut. The program is being used with success in Georgia, Sullivan said.

Malloy's proposal lists large, line-item cuts for numerous state agencies, but does not include any specific programs to eliminate. For example, the state Department of Education faces a $13 million reduction on top of an $8 million rescission made last week, but Malloy's office won't say what programs may be at risk.

"This won't be easy, and parts of it will be very difficult," Malloy said in a press release emailed to reporters Friday afternoon. "We are very mindful of the fact that most of the cuts that will end up being part of the final package will have a real impact on people's lives, so we want to do this as carefully as possible. But the reality is we have no other choice; spending must be cut."

Human service programs would take an especially big hit under Malloy's framework. The state Department of Social Services would have the largest total cut, a net reduction of $63.5 million.

"He's taken so much off the table that this is the only sector left to cut,'' said Sheila Amdur, interim president and CEO of the Connecticut Community Providers Association, which represents nonprofit health and human service groups.

"Services will be cut, layoffs will happen,'' Amdur said. "It's devastating. ... I cannot even imagine what the thought process here is."

Barnes acknowledged that the budget-cutting process could be painful. "I don't think anybody thinks the cuts we need to put in place to [deal with] the budget deficit are easy to deal with,'' he said.

Malloy's pledge to tackle the state's fiscal crisis in a bipartisan way won him a positive response from his political opponents.

"Every journey starts with a first step and this was a first step,'' Rep. Larry Cafero, R-Norwalk, the Republican leader in the House, said of Malloy's road map.

"We're in pretty serious, tough shape and it's the responsibility of everyone to pull together and try to work it out,'' Cafero added. "That's something we want, it's something the governor wants and I appreciate the opportunity to do that."

Incoming House Speaker Brendan Sharkey also views the road map as a starting point, said his spokesman, Gabe Rosenberg. "Rep. Sharkey is looking forward to seeing the details and moving forward in a bipartisan manner.''

Senate President Pro Tem Donald Williams said the hard work lies ahead.

"I give the governor credit for initiating bipartisan talks as we work to close the budget shortfall,'' Williams said. "In the coming weeks, we expect to hear from people about the impact of these cuts. The reality is, there are no easy choices but difficult cuts must be made. I agree with the governor, however, that mid-year cuts to municipal aid should not be included in the mitigation package."

Roy Occhiogrosso, a senior aide to the governor, said Malloy intentionally was not specific on what programs various state agencies should cut.

"Our folks at [the Office of Policy and Management] have identified areas in the budget where we believe cuts can be made," Occhiogrosso said. Malloy "put a framework out. He'd like all sides to sit down and come up with specific line items to get to these totals. It's not a specific list."

"We believe cuts can be made," Occhiogrosso said.