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Malloy's Plan Increases State Budget 2.4%; He Addresses Full Legislature Wednesday

Christopher Keating

February 15, 2011

As Gov. Dannel P. Malloy prepares to unveil his proposed budget Wednesday, taxpayers are already angered by his proposed tax increases of $1.5 billion and some are questioning whether he can receive an expected $2 billion in savings over the next two years from the state employee unions.

The amount of savings had been a well-kept secret in recent weeks as the Malloy administration and the unions began closed-door talks on closing the state's projected $3.7 billion gap in the next fiscal year. The two sides have been talking about savings, but they have not entered formal negotiations on any concessions on salaries and benefits for about 45,000 unionized employees.

While the Malloy administration has been talking about cuts for weeks, the proposed budget will actually increase by 2.4 percent in the first year and another 2.4 percent in the second year — growing from the current level of $19.28 billion annually to $20.2 billion by the end of the second year.

The cuts that Malloy has been discussing are from the "current services'' budget, the amount of money needed to fund all current programs. That budget assumes increases for salaries, utilities, fuel and other expenses.

In the budget nomenclature at the state Capitol, a cut of $2 billion in the "current services" budget does not mean that the $19 billion budget this year would be a $17 billion budget next year. It means that, without the proposed cuts, next year's budget would increase even more. So, while Malloy can claim to have cut some expenses from the budget, his proposal would not cut enough to prevent the bottom line from increasing to $19.7 billion in fiscal year 2012, which begins July 1.

Any union concessions would be part of Malloy's overall package, which includes $1.5 billion in tax increases in the first year. These include hikes in the income, sales, gasoline, cigarette, and alcohol taxes.

Malloy conceded that his tough-love budget won't win him many friends, but he said tough choices are needed to get the state back on the path to prosperity.

"You know what? Everybody's going to be upset,'' Malloy told reporters Tuesday. "That is a certain reality.''

He added: "Nobody wants more taxes. I don't want more taxes. There's no easy decision. ... That's why I've been very clear for a long time that this was about shared sacrifice.''

Focus On Unions

Under the law, the state employee unions do not have to agree to any changes in their benefits because of a deal that lasts until 2017. That deal was struck in 1997 by Republican Gov. John G. Rowland and the Democratic-controlled legislature, and the deal was described by many at the time as a good idea.

But the deal has been widely criticized in recent years, and Malloy said Tuesday that he has been hamstrung by the 20-year agreement.

"I was dealt a benefit package that was negotiated many years ago for 20 years,'' Malloy said. "If you asked any mayor or first selectman or council member in the state of Connecticut if they would bind their community to a benefit package for 20 years, they would look at you as if you were crazy.''

Despite any concerns, Malloy's senior adviser, Roy Occhiogrosso, said that reaching $1 billion in savings each year from the unions is achievable.

"It wouldn't be in there if it wasn't realistic,'' Occhiogrosso said, adding that the goal is "very realistic.''

But Republican legislators raised questions Tuesday about Malloy's package, which has been released in pieces each day for about a week. House Republican leader Larry Cafero of Norwalk is particularly concerned about one of the largest tax increases in state history. The increases include extending the sales tax to car washes, non-prescription drugs, haircuts, yoga studios, limousine services, manicures, pedicures, and others.

"Picture a person who's making about $60,000 a year who realizes that their income tax just went up, that the $500 they were able to write off on their income tax because of property tax they paid will no longer be there,'' Cafero said. "And, by the way, if they have to go and get gas for their car, it's an increased cost. If they happen to be a smoker, it's an increased cost. Increase, increase, increase.

"Some might say these are tough times, we all got to chip in, we all got to share sacrifice. Then they look and say, 'So let me get this straight: You're spending more money for government next year than you did this year. Where's the sharing?"'

During a briefing with Malloy's aides, Cafero and Senate Republican leader John McKinney of Fairfield said they asked how many of the state's 45,000 full-time workers would be cut, and they were told 150. They also asked what specific programs would be privatized and what state facilities would be closed.

Malloy's budget director, Ben Barnes, confirmed that there would be 150 positions lost as a result of agency consolidations alone.

Cafero said a small state police office devoted to gambling would be closed and the state's vocational-technical schools would be handed off to the local communities that house them. Also, some Medicaid benefits would be reduced: A provision permitting recipients to see a dentist twice a year would be reduced to one visit a year.

But the large-scale privatizing of state programs and property, such as closing Riverview juvenile psychiatric hospital or handing off the management of Bradley International Airport — two proposals the GOP has long favored — are not part of Malloy's plan.

When asked if he has heard from his constituents about Malloy's plan, Cafero answered, "Oh, Madone! The phone's ringing off the hook! People are angry."

Malloy's budget also includes the extension of the 10 percent corporate surcharge for two years and reductions in the amount of credits that would be available for movie production companies filming in Connecticut. The film tax credit has been controversial. Opponents have said it is essentially a giveaway to Hollywood. Proponents, however, say it has succeeded in bringing high-profile actors and their movies into the state.