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Malloy Orders $170 Million in Budget Cuts In Tough Economy

Lawmakers Say This Is Only The Beginning

By CHRISTOPHER KEATING

November 28, 2012

HARTFORD— Seeking to close a growing budget deficit in a sluggish economy, Gov. Dannel P. Malloy on Wednesday ordered $170 million in cuts that will reach most major state agencies.

The cuts will reduce the state budget deficit by $123 million. The other $47 million in reductions had already been planned but not yet enacted.

Although the wide-ranging cuts hit education, public health and social services, they represent only the first round of reductions. The pain, lawmakers say, is down the road, when Malloy and the legislature try to close the full $365 million gap in the current fiscal year — and nearly $1.2 billion in the fiscal year that starts July 1.

The cuts Wednesday hit more than 275 programs. They take $2 million from magnet schools and $1 million from priority school districts that have been underperforming. The overall education cut at the elementary and high school level is $8.43 million, including $1.1 million from the regional vocational-technical school system. The cut to UConn represents 5 percent of the annual state allocation, although the university has other sources of revenue, including tuition and fees.

Malloy is sensitive about cuts to elementary education because he pushed for reforms of the public schools. Some of those reforms were watered down to the point that lawmakers voted against them.

Malloy's senior adviser, Roy Occhiogrosso, said that any cuts to pre-kindergarten through 12th grade would not hinder the reforms that were pushed by Malloy.

The cuts are needed because state tax revenues are coming in slower than expected. Malloy says the Christmas shopping season will be an important barometer of the state economy and an indicator for the state budget in the coming months. If Christmas sales are better than expected, the state will be collecting more money from the 6.35 percent sales tax. If the stubbornly high unemployment rate continues, more workers will remain out of jobs and they might spend less money on Christmas presents.

Republican Sen. Rob Kane said the state needs to rein in spending instead of adding to the largest tax increase in state history, passed last year. Lawmakers are expected to tackle the deficit when they return to Hartford in a pre-Christmas special session.

"I'm looking forward to going back into session,'' Kane said Wednesday night. "We have a great opportunity to reform government, and I don't want to let it slip by.''

Under the law, Malloy can cut up to 5 percent in certain budget lines. Larger budget cuts can only be made with the approval of the House of Representatives and the Senate.

One of Malloy's reductions is $28.4 million in fringe benefits for state employees under the health services account. Malloy's budget chief, Ben Barnes, said that the decrease is possible because the state's expenses are currently "running less than we originally budgeted'' for this year. "We will obviously meet all our obligations to provide those health benefits,'' he said.

Among the biggest reductions is $10.2 million for UConn, including $9.6 million in operating expenses.

The cuts also include $7.1 million from the regional community-technical colleges and $7 million from the four-branch Connecticut State University system, which has college campuses in New Britain, New Haven, Danbury and Willimantic.

Facing $14.4 million in overall cuts, Philip E. Austin, interim president of the Board of Regents for Higher Education, said in an email that the cuts to the state's universities, community colleges and Charter Oak State College "will be difficult to absorb across our campuses, but the state is facing a budgetary shortfall and we must operate within the limits imposed by available state resources."

Austin said he would work with the system's financial officer and presidents to determine how these cuts will affect the colleges and universities and will present a plan to the Board of Regents.

"It's obviously our intent to keep the cuts as far away from classroom instruction as possible," Austin said in the email, "understanding that there will be many tough choices ahead for us. At the end of the day, our primary focus must remain on student success and the programs that help support that effort."

On the cut to UConn, President Susan Herbst wrote in an email to the university community that her approach will be "to protect what is most vital to us: our core academic missions of teaching, learning, and research, including the much-needed faculty hiring initiative that is underway. We will not halt our faculty hiring plan, and will keep building our research infrastructure."

Herbst said the cut means that UConn will lose 5 percent of its state appropriation for the current fiscal year. With fringe benefits calculated in, she said, the total reduction in state support is $15 million.

"Today's announcement was not a surprise," Herbst said in the email, "and as an institution, we know we must work with the governor as we share in the necessary sacrifices."

She said that "painful cuts will have to be made to many non-academic areas, but we will absolutely not allow them to endanger the work of our faculty or the academic success of our students, which are, after all, the reasons we exist."

Senate Majority Leader Martin M. Looney of New Haven said the legislature was prepared to work with Malloy in a pre-Christmas session during the week of Dec. 17.

"Making cuts like these is never easy; however, given the current shortfall, they were unfortunately necessary in order to bring our budget into balance,'' Looney said in an email. "Just as we did two years ago when we worked to erase a $3.65 billion structural deficit, we are committed to working with Gov. Malloy to reduce spending and make the difficult but essential choices necessary to balance the state's budget before the new year."

Many of the agencies will have cuts in "personal services," which includes overtime and salaries saved from unfilled positions. Unionized state employees will not be laid off, as part of an agreement that was reached last year with Malloy.

Although Malloy signed off on the plan, it was explained to reporters at the Capitol by Barnes and Occhiogrosso. Asked about potential layoffs, Barnes said, "We focused on reductions that we can accomplish through attrition over the course of the year.''

Because Malloy has little direct control over the legislative and judicial branches, he did not release line-item cuts for those branches. But he called for $5.75 million in cuts in the judicial branch, which runs the state's court system, and $3 million in cuts from the legislative branch.

The state Department of Children and Families, with an annual budget of more than $800 million, will absorb an $18.3 million cut. Nearly half of that came from funds that pay for children to live at residential treatment centers — the most expensive form of care.

For the past 20 months, the department has been steering children away from the campus centers and into foster care and other community-based programs, so the agency can take this monetary hit without significantly hurting services to children, said DCF spokesman Gary Kleeblatt.

The number of children in DCF care overall has dropped 13 percent since January 2011, and the number of children placed with relatives has increased.

"That's a good thing for kids, and it's allowed the department to realize some savings,'' Kleeblatt said. "These are difficult times, and we have to do more with less, but we're fortunate to be experiencing a positive trend.''

Kane, the Republican senator, said the cuts should have been made another way.

"In DCF, there was $18 million in cuts to programs. Listen, we have $30 million in administrative salaries,'' Kane said. "I'd rather see us cut some bureaucrats in Hartford, rather than cut programs for people who need it. The real work gets done by social workers.''

At the Department of Mental Health and Addiction Services, spokesman Jim Siemianowski said that the full impact is not yet known because the department is still analyzing the details of the $7.7 million in cuts.

"The department has just begun to evaluate the specific cuts, the exact impact, and the manner in which they will be implemented,'' he said. "The largest cuts were in the area of grant funding for mental health and substance abuse services. The department will now begin working within our agency and with our providers in order to ensure that critical services are available and the essential needs of our clients are met. The current fiscal environment dictates that we must live within our means.''

Courant staff writers William Weir, Josh Kovner, Dave Altimari and Kathy Megan contributed to this story.