Malloy orders one of the largest budget cuts in Connecticut history

Gov. Dannel P. Malloy unveiled one of the largest budget-cutting plans in recent history Friday, targeting more than 3,600 Executive Branch jobs for layoffs while eliminating funding for more than 6,500 jobs in total.

The governor's plan also carves deeply into social services and health care -- an area Malloy pledged to protect during last fall's campaign -- transportation, prisons and education while eliminating dozens of programs and closing numerous facilities.

Those changes also likely mean a new asset test for certain Medicaid patients, increased bus, rail and other transit fares, and a 1.5 percent cap on raises for unionized workers who weren't laid off.

Malloy also cut budgets for the Judicial and Legislative branches to save $43.2 million and $9 million respectively this year, estimating these branches would have to shed another 500 jobs beyond the 6,060 targeted in the Executive Branch.

But while legislative cost-cutting plans hadn't been announced yet, Chief Justice Chase T. Rogers announced over 600 additional job cuts and closure of the New Haven Juvenile Detention Center and several courthouses.

"We are entirely aware of the impact this plan will have on the lives of thousands of our fellow state employees and their families, and people across Connecticut who have become used to a certain level of services provided by state government," Malloy and Lt. Gov. Nancy Wyman wrote in a joint statement Friday morning. "We will do our best to mitigate that impact. As everyone knows, this was not the path we chose, but at this juncture, it is the only path we can take. Connecticut is in the midst of the worst fiscal crisis it's faced in many, many years."

Besides cutting 4,328 Executive Branch jobs through layoffs and anticipated retirements, the governor's plan also cancels 133 temporary positions and eliminates 1,599 vacant posts.

The plan, prepared in response to a failed union concession deal that had been expected to save $1.6 billion over the next two years, drew a cautious response from the State Employees Bargaining Agent Coalition, which is meeting Monday to consider new bylaws that would make it easier to adopt future concession deals.

"Our position remains the same: we need a new path forward," said SEBAC spokesman Matt O'Connor, who said union leadership remains committed to reaching a concession agreement with Malloy. "We all know we need a mutual agreement. The alternative is spelled out in the documents we see today. These would be catastrophic cuts to services and to the workers who deliver them. We would see a degradation of the quality of life in Connecticut."

The governor, who said repeatedly last fall that "we're not going to shred the safety net," cut $159.3 million this fiscal year from the departments of Mental Health and Addiction Services, Social Services, Public Health, Children and Families, and Developmental Services.

Those cuts alone represent 22.6 percent of Malloy's entire $700 million budget-balancing effort for 2011-12. They also lost just under 1,600 positions combined. But it's also not too surprising given that the five agencies represent 42 percent of this year's $20.14 billion budget.

Malloy took aim at one of state government's single-largest expenditures, the Medicaid program that provides an array of health care services to poor residents.

The administration would limit eligibility in Medicaid for Low Income Adults, which provides health services to poor adults without children. It would limit coverage to those with assets below $25,000 starting with the 2012-13 fiscal year. Currently, a person's assets are not taken into account when determining eligibility, one reason that officials have cited in the dramatic growth of the program in the past year.

The program began last year when the state converted the state-administered general assistance program, or SAGA, to Medicaid, allowing it to generate federal matching funds. Officials had expected the move to save the state money, but the increased caseload - it has grown by 57 percent in the past year - has cost the state more than expected, and stems in part from the removal of the $1,000 asset limit that had applied in SAGA. The administration is also proposing to count family income in determining a person's eligibility for the program.

Office of Policy and Management Secretary Benjamin Barnes, Malloy's budget director, defended the move, noting that the Low-Income Adults program recently was opened to 18- and 19-year-olds, some of whom have turned out to be students from families with sufficient resources to meet their health care needs without public assistance.

"We believe that these are very reasonable limitations on the program," he said.

The administration expects the changes would save $30 million a year, but does not anticipate any savings from this fiscal year because making the change requires permission from the federal government, which can be a lengthy process.

Another change likely to be controversial is a restructuring of Medicaid rates paid for physician services, behavioral health and durable medical equipment, which is projected to save $7.7 million this fiscal year and $10.1 million the next. Patient advocates say rates paid to Medicaid providers are already low, discouraging them from participating in the program and making it harder for patients to access care.

Community health centers and school-based health centers, which serve many low-income patients, would also see their state funding reduced. Community health centers would see a cut of $2.6 million in state funding each year, which the plan notes could limit the ability to maximize federal funding. School-based health centers would lose $1.3 million each year, which the budget document says will lead to reductions in staffing, hours of service and services at the clinics.

The position cuts at DSS include 17 temporary jobs for retired workers who have been helping to address the high error rates in the Supplemental Nutrition Assistance Program, formerly known as food stamps. Federal officials have warned that the state could face financial sanctions if its performance in administering the program is not improved. Terminating the 17 positions early is projected to save $177,559.

DSS also expects to save money by re-estimating funding levels for certain services. Expenses were lower than budgeted for the state-funded portion of the Connecticut Home Care Program for Elders, and the department expects to save more than $13 million a year from re-estimating its cost while still providing enough funding to accommodate modest growth in the caseload. Similarly, the department expects to save $3 million a year by re-estimating savings from reducing the volume of dental services adults in Medicaid can get in a year.

A state-run Birth-To-Three program, a popular early intervention, school readiness program that serves about 305 clients, would be eliminated. This cut would not affect 43 other Birth-To-Three programs that are privately operated under contract with the state.

The Department of Developmental Services would delay placement of clients into group homes when vacancies occur, saving $720,000 per year. A budget document noted that the proposal is being made "although these vacancies are often critical to meeting the needs of clients who can no longer live at home."

The Department of Public Health would reduce funding for HIV prevention services, including testing, prevention intervention, housing and emergency financial assistance. At the same time, the state would delay a waiver for home and community-based services for people with HIV and AIDS that would provide case management, homemaker services, respite and other services until July 1, 2012.

Other safety net cuts include:

• Family support teams that serve 1,200 families with children living at home through the Department of Developmental Services.
• Eighty state-operated detox and rehabilitation beds on the Middletown campus of Connecticut Valley Hospital. Most people seeking help would instead get services in the community or in hospitals, according to the budget document. The move saves $19.2 million over two years.

Though not considered part of the traditional social services "safety net," programs for Connecticut veterans were scaled back in several areas as the Department of Veterans Affairs lost  $4.7 million and 55 positions this year. Therapeutic, recreational, laboratory testing, and on-call health care all were reduced, while the state cut from $100 to $75 the subsidy it provides to help veterans' families install special grave markers.

The two largest agencies within the Special Transportation Fund, the Transportation and Motor Vehicles departments, absorbed a total cut of nearly $100 million and 1,075 positions this year.

The Pay-As-You-Go program, a new initiative started by Malloy to repair transportation infrastructure with life spans of 20 years or less, lost more than $15.6 million in funding this year, while another $166,000 would be saved by inspecting state bridges less frequently.

The plan orders a 15 percent rate hike on the Metro-North commuter rail service line linking New Haven and Manhattan, and a 14 percent hike on the Shoreline East rail service. Weekend service on Shoreline East was canceled while a $2.7 million subsidy cut for statewide bus service is expected to take 40 buses and 50 transit employees out of operation -- ultimately reducing services. Night bus service in Waterbury also was canceled entirely.

The administration eliminated the Dial-A-Ride program for all non-disabled patrons while also cutting subsidies for bus, rail and transit services for the disabled by 10 percent, likely forcing a corresponding increase in rates for those passengers.

And seasonal ferry passenger service across the Connecticut River would end, both the Rocky Hill-to-Glastonbury ferry and the Chester-to-Hadlyme connection.

Leaders of the legislature's Democratic majority were relatively restrained in their comments about the plan, backing the Democratic governor and saying that while the cuts are painful, it is more essential than ever that state employee unions adopt a concessions package.

"If you talk to any legislator they will tell you they don't like these cuts," Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, said. "But unless the state employees have a second vote and ratify the concessions, there are few alternatives -- and the alternatives aren't appealing as well."

The spokesman for House Speaker Christopher G. Donovan, D-Meriden, said Democratic lawmakers still tentatively plan to have the Appropriations Committee review the cuts at an Aug. 15 public hearing. But spokesman Douglas Whiting also said that while "the speaker believes these cuts would do great harm to the state, he thinks the best and most responsible solution is for the governor and SEBAC (State Employees Bargaining Agent Coalition) to find a way to reach an agreement."

Leaders of the Republican minorities in the House and Senate did not comment on the Malloy plan Friday afternoon.

Plans to close two state prisons were announced earlier this week, but several other areas tied to public safety also were targeted for reductions.

Word also leaked out earlier this week about plans to eliminate 57 state trooper posts, reducing the overall trooper force to 178 below the statutorily mandated level of 1,248.

Municipal fire departments took a hit in the plan when Malloy cut 10 percent of the funding for the state's nine fire training schools, a move expected to save $23.1 million this year.

And the administration also plans to eliminate 13 new or vacant positions in the Division of Criminal Justice while laying off another 62 employees.

Meanwhile, the Judicial Branch announce layoffs for 452 employees, about two-thirds from court operations and another third from court support services. Among the positions reduced were clerks, interpreters, court monitors, family relations counselors, mediators and law library staff.

Besides closing the New Haven Juvenile Detention Center -- the oldest of three such centers under branch jurisdiction -- and ordering a major court closure and reorganization plan, branch officials also ordered several other programmatic cuts, eliminating:

• Special court sessions in Danielson, New Haven and Bridgeport to specifically adjudicate individuals charged with drug offenses.
• Thirty-two supportive housing beds in New Haven and Hartford for people who no longer can stay in shelters.
• And a community program that mediates minor criminal disputes in urban centers.

The new Department of Energy and Environmental Protection received funding cuts for mosquito control, emergency spill response, clean air and solid waste management programs while funding for the Operation Fuel heating assistance program was eliminated entirely.

The administration also found several new areas to save money in just over one month since the new biennial budget was adopted.

New cost estimates for providing state employee health insurance -- before layoffs and other job reductions were applied -- should save $36.4 million this year, while other health care efficiencies involving services to Medicaid and Husky patients should save another $12.4 million.

State buildings will be a little dirtier and a little less protected. The plan cuts $400,000 from security and $280,000 from maintenance. Many state buildings now will be staffed only between 7 a.m. to 7 p.m., saving another $410,000.

And by canceling or changing technology contracts and consolidating emergency phone lines, the governor hopes to save another $1 million each year.

The huge reduction in the state workforce is expected to translate into significant savings in providing benefits over the next two fiscal years.

The layoffs and retirements will cut fringe benefit costs by $16.4 million this year and by nearly $57 million in 2012-13.

The administration also hopes to save $42.6 million included in the original budget for raises tied to new contract awards this year. Malloy's plan calls for any new contracts with bargaining units to limit general wage hikes to 1.5 percent, though most state bargaining matters are resolved in arbitration.

The state's nine watchdog agencies, who were merged into the controversial new Office of Governmental Accountability during the regular legislative session, would lose $982,560 and another 11 positions. But the plan was unclear how those staffing cuts would be apportioned among divisions handling ethics, elections enforcement, freedom of information issues, and other watchdog functions.

Malloy, who was challenged last month by Senate Minority Leader John P. McKinney, R-Fairfield, to lead by example and cut his own staff, did cut funds for the governor's office, Wyman's office, and the Executive Branch's chief budget agency.

But it was not immediately clear how many employees might be laid off.

Malloy's plan cut $255,880 from personal services within the governor's office. But the budget narrative says this "could result" in the elimination of three full-time staffers and possibly one or more part-timers.

The cut to Wyman's office, which is one of the smallest in state government, involves $170,000 and eliminates two already vacant positions.

Meanwhile, the Office of Policy and Management, the governor's budget agency, loses $2.3 million from its personal services account. But that the narrative says that reflects "attrition, funded vacancies and layoffs," it doesn't specify how many of the latter occur.