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Malloy's budget raises concerns

By Johanna Somers

Publication: The Day

Published February 08. 2014 4:00AM
Legislators looking for clearer picture of governor's plan

Hartford - On the day after Gov. Dannel P. Malloy presented his budget to the General Assembly, legislators quizzed the governor's budget chief, Benjamin Barnes, about changes to next year's spending plan.

Republican legislators said they were concerned about offering tax cuts without a plan to pay for them, placing $60 million "off budget" so that the state wouldn't go over its spending cap and adding about 100 engineers to the Department of Transportation. Democrats said they valued the Malloy administration's jobs program for the unemployed, college tuition support and long-term debt mitigation.

One of Malloy's proposals included starting a new fund for the Connecticut State Colleges and Universities, which include state universities, community and technical colleges, and Charter Oak State College. But the $60 million Malloy proposed to help keep tuition low, offer degree incentive programs and support veterans would be placed "off budget" in a new fund called the Board of Regents - President's Office Operating Fund. This means the $60 million wouldn't be part of the state's spending cap calculation.

A statutory spending cap was put in place by the General Assembly in 1991 to tie the growth of the state's budget to personal income growth or the rate of inflation. In 1992, voters passed spending-cap requirements, and the 28th Amendment was added to the state constitution.

The Malloy administration said during budget presentations that its budget proposal was $8.1 million under the spending cap. But had the administration appropriated the funds for state colleges as it has previously, the budget would have been over the spending cap, said state Sen. Bob Kane, R-Watertown, who is the ranking member of the Appropriations Committee.

Kane said he wanted to know whether the maneuver of moving the $60 million "off budget" was done to avoid the spending cap.

"If we were to appropriate $100 million more, we would be over the spending cap," Barnes said. "If we were to appropriate $9 million more, we would be over the spending cap."

But the administration didn't appropriate this money; it went into a new fund and is not subject to the spending cap, Barnes said.

Last year, Malloy proposed removing Medicaid federal reimbursements from the state's spending cap and onto the list of "non-capped" expenditures, such as debt service payments and certain grants to poor towns and cities. But he didn't have the votes in the Senate. So the General Assembly moved more than $2.8 billion annually in federal reimbursements for Medicaid "off budget."

Therefore, Malloy's budget proposal for next year is $19 billion and considered under the spending cap instead of $22.3 billion and over it.

Republicans also questioned adding 103 employees to the DOT staff. State Rep. Craig Minor, R-Litchfield, asked whether adding the DOT jobs would be a sustainable change.

Barnes said that the majority of the new salaries would be paid for through federal funds. The state's share of the cost would come from the state's Special Transportation Fund, which gets revenues from the gas tax.

"But there is a risk at the federal level. As you may know, there is some concern about proposed dramatic reductions to the amount of federal transportation spending," Barnes said. "Were that to happen, we would adjust back the amount of hiring."

State Rep. Gail Lavielle, R-Wilton, said she was wondering how the state would pay for recurring tax breaks such as the sales tax exemption for non-prescription drugs and an insurance premiums tax exemption for municipalities, especially when there are projected deficits of $1 billion a year starting in fiscal year 2016.

Barnes said the state's Office of Policy and Management believes that if the state did nothing, there would be a problem, but that the state has a history of balancing budgets.

State Rep. Betsy Ritter, D-Waterford, said she wanted to give a quick "shout out" for one item that caught her eye.

"And that is the proposal to help people return to higher education to get their degree," Ritter said. "I want to thank you for that, I thought it was particularly innovative."

Malloy proposed offering students who had been out of college for more than 18 months one free course for each course taken at a public college, up to three free courses total.

The co-chairmen of the Appropriations Committee also complemented the budget. State Rep. Toni Walker, D-New Haven, said she liked the administration's focus on long-term unemployment, while state Sen. Beth Bye, D-West Hartford, said she appreciated the administration's aim to reduce the state's long-term debt. The administration said that it was reducing the state's long-term liabilities by $12.2 billion, to $64.6 billion. Most of the reductions are from projected retiree health insurance savings due to the 2011 State Employees Bargaining Agent Coalition (SEBAC) agreement.

j.somers@theday.com

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