Despite repeated assurances from Gov. Dannel P. Malloy that savings from union concessions and other cost-cutting measures would be achieved, nonpartisan legislative analysts reported a nearly $145 million state budget deficit Wednesday evening.
The latest projection from the nonpartisan Office of Fiscal Analysis doesn't include the nearly $79 million in new cost-cutting measures announced Tuesday by Malloy's budget office.
But legislative analysts did echo a warning issued a day earlier by Senate Minority Leader John McKinney: that Malloy's latest plan counts several reductions already incorporated into earlier forecasts, making the $79 million estimate suspect.
"The budget is heavily reliant on budgeted lapses to achieve balance," legislative analysts wrote, referring to nearly $778 million in lapses, or savings targets to be achieved by the administration, in general fund programs. The general fund, which stands this year at $18.7 billion, covers the bulk of the operating costs in this fiscal year's overall $20.14 billion budget.
Lapses are a regular function in the state budget process, and sufficient funds routinely are withheld from agencies and departments to ensure those savings targets are met.
But the $778 million lapse in the general fund was particularly high this fiscal year, more than three times the savings target built into last year's budget, because of expectations from the union concessions deal.
The administration said that plan would save $700 million this year -- including $657 million in the general fund -- from: a wage freeze, a new employee wellness program, large numbers of worker retirements, benefits changes and cost-saving ideas from three labor-management panels.
Yet legislative analysts noted that despite being responsible for $778 million in savings, the administration has withheld less than $652 million to date. "About five months remain in the fiscal year and the remaining $126.5 million may still be achieved through various savings or budgeting mechanisms," analysts wrote.
The labor-management panels were supposed to identify various efficiencies across state government to save $170 million this year alone. But two of the three panels hadn't even met until the fiscal year already was nearly 4 months old. Rather than wait, the administration drew up its own blueprint in October, assigning each agency a share -- regardless of whether these panels recommend any efficiency strategies.
And Malloy's latest budget challenge is further compounded by the fact that legislative analysts identified nine agencies with potential cost-overruns totaling more than $127 million. The largest of these involves the fringe benefits account for state employees. The administration initially hoped to save $120 million in this area this year with the wellness program. But while it estimated that half of all state employees would pay higher premiums rather than agree to receive regular physicals and other health care screenings, only 4 percent chose to pay more and to not participate.
Malloy's budget director, Office of Policy and Management Secretary Benjamin Barnes, said late Wednesday that his office would review the OFA forecast, but, "I have confidence in the projections released" by the administration.
Barnes' office reported a razor-thin general fund surplus last week of $1.4 million, which represents 1/134th of 1 percent. That also fell well short of the $75 million surplus level Malloy needs to continue the ongoing conversion of state finances to Generally Accepted Accounting Principles -- one of the governor's major campaign pledges.
Originally designed to run $88 million in the black, this year's budget took a hit earlier this month because of declining state tax projections. The new OFA report marks the first time the budget outlook worsened significantly due to concerns about rising spending.
The governor used his emergency fiscal authority Tuesday to cut the budget without legislative approval.
The executive branch will be responsible for $72.1 million of the cuts, with $5.76 million coming from the judicial branch and $800,000 from the legislature. More than one-third of the cuts, or $28.4 million, were assigned to the Department of Children and Families, with the Department of Mental Health and Addiction services getting the next biggest hit, $14.5 million.
Malloy cut the Department of Education by $3.2 million while more than $6 million was cut from public colleges and universities.
The cuts also will mean delays in filling vacant positions.
But McKinney, a Republican of Fairfield, said Tuesday he suspected that nearly $42 million of the reductions Malloy ordered involved savings the administration already had reported to meet its lapse target, leaving only about $37 million in new reductions.
Legislative analysts wrote in their report Wednesday that "We are currently conducting an analysis of these rescissions of programmatic impact as well as potential overlap with existing lapses."
"After passing the largest tax increase in state history, Democrats have still managed to spend us into deficit," McKinney said Wednesday.
"Among other things," he said, "today's projections confirm that the labor deal Governor Malloy cut with state employee unions will not yield the savings he promised taxpayers. Now Governor Malloy has a $145 million budget hole -- $220 million if he intends to keep his promise to comply with GAAP -- and only $32 million worth of ideas to fill it.
"His math simply doesn't add up," McKinney said. "It's time to go back to the table and discuss real spending reductions to protect Connecticut's economic future."
But Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, responded that "Connecticut's budget will be balanced through the rescissions Governor Malloy has already proposed and other savings that the legislature will enact if necessary," charging that the alternative budget Republicans offered last spring would have left the state far deeper in debt "through their smoke and mirrors budget tricks and borrowing. Fortunately, we did not go down that road and Connecticut's projected shortfall is far less than most other states."
Malloy said Tuesday that his latest cuts don't reflect the maximum reduction he could have made, adding that further cuts could be ordered if the budget picture worsens before the fiscal year ends June 30.
The deficit projected by OFA falls less than $42 million shy of equaling 1 percent of the general fund. By law, if the comptroller's office certifies a deficit of that level, the governor must submit a deficit-reduction proposal to the legislature.
McKinney and Cafero can squawk all they want; their noise is a mere annoyance. The fact of the matter is that we're going to end the fiscal year with a balanced ledger and it's going to be the Governor who balances it - NOT McKinney or Cafero.
Cut out all rhetoric and lay off a substantial number of state employees.
Increase the requirements for eligibility for entitlement programs and cut back off-base-Obama-prone entitlement and welfare programs that are bankrupting this nation. Tenured state employees may be given cash and other types of pension incentives to take early retirement. Drastic measures are needed when you are in dire straits.
I told you, I told you, I told you. This is going exactly as I predicted- but even sooner than I expected.
Malloy's plan was a stupid one right from the beginning. It fixed nothing. It was all pretend savings and very real tax increases.
democrats will be whining about the need for more tax increases and this state will continue to sink into oblivion because all democrats know how to do is spend and tax.
Hey realkook,
Layoff state employees? Hmmmmmmmm....in case you don't remember, sweetheart, there is a little thing called a contract with a guarantee of 4, yes, 4, yes, 4 years of no layoffs. Do you suggest the Governor breaks the contract and the unions sue????
How about taxing the wealthy more...not a lot more, just a bit more...taxing the 1% their fair share. After all, I'll bet you pay a tax rate of 30%, while the mills and the bills pay, what, 15% OR LESS? Oh, cry the Republicans, but they are the job creators! Really? Where are the jobs? Yes,
Read MoreI totally agree with what Realkook said. The retired state employee pension & benefit packages are killing this state financially. Senators McLechlan & Roraback are now introducing legislation that will abolish the pension program for new hires. That's an excellent idea which is long overdue. The problem is that Speaker Donovan would NEVER let this legislation come to the floor for a vote. It will never get out of committee. The Democrats in Hartford are controlled by the Unions.
For once the comments are correct and nearly unanimous.
We all did tell you so.
Malloy's failure to get any concessions from existing retirees is poison.
This year the deficit will be big.
Next year the deficit will be bigger, based on predicted 900M savings.
The following year the deficit will be huge, based on resumption of guaranteed 3% raises and no layoffs, not to mention continued COLA for all retirees.
When does the foolishness stop?
>>I totally agree with what Realkook said. The retired state employee pension & benefit packages are killing this state financially. Senators McLechlan & Roraback are now introducing legislation that will abolish the pension program for new hires. That's an excellent idea which is long overdue. The problem is that Speaker Donovan would NEVER let this legislation come to the floor for a vote. It will never get out of committee. The Democrats in Hartford are controlled by the Unions.>>
I hope all media - including CT Mirror get on top of this and STAY on top of this.
Donovan just
Read MoreNow what- It has been the Democrats giving into union demands for decades that has brought us to this. The gov made a overly optimistic estimate of income. He boosted taxes which discourage companies from locating or expanding here. That is evidenced by Malloy having to bribe companies with tax abatement or payments to come here or expand. And then we get ploys like the Cigna one where they can count the contract landscaper as a job. Than we have the union contract where Malloy gave away the store with no loss of jobs even through attrition. We still count
Read MoreMaybe Malloy should not have guaranteed no layoffs. And Obama would like to tax the wealthy at 30%. Add state and local taxation and you could be at 50% in taxes in some states. Many small businesses would be considered wealthy and this would impact expansion plans on their part and jobs. You can confiscate all of the wealth of the rich and you still couldn;'t pay off the federal deficit. Cutting spending is the answer. Change the tax laws to get rid of loopholes and lower the corp tax rate to something competitive instead of the 2nd highest in
Read MoreNot to be gruesome but does anyone know the actuarial projections for the 45000 or so existing state retirees? I would assume it’s factored in but you never hear it mentioned. There can’t be that many active tier 1 employees left. It seems to me that (failure to properly fund pensions aside for the moment) pension liability should start tailing off as people pass on and more tier 2 folks become part of the mix. What am I missing?
What gives with Sen. Williams' comments referencing the Republican alternative budget? May I suggest that alternative isn't relevant to the facts reported in this story. In making these comments it can only be assumed that Senator Williams is either admitting he was fooled by the Governor's budget which he "stewarded through the State Senate" or that he is attempting to deflect attention away from the real issue, which is that this administration (with the help and assistance of the General Assembly), have tax-and-spent us to a point of deficit.
Quite simply, this administration and our General Assembly have
Read MoreTo be accurate the Governor is not restricted regarding layoffs. Two weeks ago 24 positions (some positions were vacant and some retired under the new pension rules) in Higher Education (CSU and community college) were eliminated.
The majority were eliminated through layoff. This department was a result of consolidation as part of the budget. Average salary $141,000. Total savings $5MM with benefits.
Note:http://www.ctmirror.org/story/15001/pink-slips-given-top-higher-education-officials
This will continue to happen throughout the Malloy Administration. Consider legislative staff, appointees within the political structure etc.
"George Levinson" - I hate to say it, but you're talking nonsense here. Current retirees' pension benefits (meaning the pension benefits of people already retired) can't be touched because it's illegal and would be stealing... as in theft. Just like it's theft to buy a product at a store with a personal check (or credit card) then going home to call your bank to issue a stop payment (or charge-back) order and failing to return the purchased product. Isn't going to happen because it CAN'T - legally current retirees have already PAID for their benefits. It's really that simple, and
Read More"Paul" - You're correct, and you're not "missing" anything. There's no real long-term "crisis" here... much as the extremely wealthy love to state otherwise (because some of them unfortunately see no moral problem with stealing other people's hard-earned money and/or paid-for benefits).
There really is no "crisis" here folks - Malloy will cut spending as necessary between now and the end of the fiscal year to ensure balanced books WITHOUT further raising taxes. It's that simple.
To "NOW"
I think you're living in a dream world. Malloy will not cut any programs dear to the hearts of the Democrats in the legislature. He boxed himself into a corner by a no layoff agreement with state workers until 2022. He's now denouncing the numbers published by the OPM and discrediting Moody's decision to downgrade our borrowing status. Moody's knows the state is in huge financial trouble, otherwise they never would have downgraded the state. The other major investment firms will soon follow suit.
His only out is to trim the budget where
Read MoreTo "NOW",
I think I'm missing something here. Doesn't the state contribute a certain percentage to the State Workers Retirement Fund or is it funded 100% from money taken out of employee's paychecks every week?
If the retirement fund is funded 100% from paycheck deductions and placed into investments, that WOULD be stealing.
I have a feeling that is not the case. I believe a certain percentage of your retirement IS funded through taxpayers dollars. In that case your retirement money was not stolen just misappropriated to fund state programs.
We need a governor who is willing to
Read MoreHow come that as the state is staring at an unexpected budget deficit in this fiscal year, which will definitely lead to much more higher deficits the next year and the year after the next.(and so forth), the newly formed Malloy's Board of Regents (with Kennedy as the new in charge bureaucrat) for the state colleges and community colleges has not only approved the hiring of a substantial number of faculty positions, but it has not been told by Malloy to put a full-scale freeze on all new hirings? Instead of taking care of these deficit affairs at home, Malloy
Read MoreFYI..We have already seen benefit cuts upheld in Colorado and Minnesota, where courts held that benefits changes could be made, in order to preserve a reasonable benefit for everybody in the plan. Rhode Island just enacted a law to change benefits including the retirement age for incumbent employees. The city of Cincinnati took similar actions. In some states, these "breaches of contract" will go to court, but what the plaintiffs often do not understand when they file suit is that several courts have supported the police power of the state to make plan modifications if they are necessary — provided
Read Moreartythesmarty, you should have read further on "This does not mean that every underwater pension plan should stiff its retirees; the plan must clearly be at risk and alternative remedies should be explored. In fact, the courts typically require such efforts before they impair contracts and reduce vested benefits". As for 401(k) plans, "new 401(k) plans cannot be instituted for state and local government employees under the 1986 tax act. Pre-existing "k" plans are allowed, but there is no ongoing federal tax authority to install these corporate-style, defined contribution (DC) plans for public employees. But there are 401(a) defined contribution
Read MoreI wonder how much this new CT Earned Income Tax Credit is costing us? When Gov. Malloy said 'shared sacrifice', he was only talking about the upper and middle class. If we are in dire straits, NOW is not the time to be giving out money. Oh, but wait a minute. The folks who do qualify for this new CT Earned Income Tax Credit are the very same folks who got Gov. Malloy elected.
"NOW" are you Roy O. or one of Malloy's other dillusional employees? Our state cannot be managed on just bullying tactics and arrogance. Our state, and our nation for that matter are simply going down the tubes thanks to Democrats and their continued increased reliance on state welfare programs and class warfare. VOTE THEM OUT!
NOW-you're as dellusional as the Governor and his budget chief is. Do us all a favor-leave; the adults in the state will take care of it. In fact, please take your pals Malloy and Barnes with you, I think they've created enough problems for now.
CT citizens better start doing their civic duty and FAST!
Between Malloy's unconstitutional forced unionization and the General Assembly's inability to rein in the spending the State of CT is killing the State.
NOW, do you not notice the exodus of the taxpayer from the State? Once we are all gone from here who will pay the bills?
NOW What?/SteveHC wrote: "'George Levinson' - I hate to say it, but you're talking nonsense here. Current retirees' pension benefits (meaning the pension benefits of people already retired) can't be touched because it's illegal and would be stealing... as in theft.
George Levinson hit a little too close to home for a Tier I State Employee Retirement System (SERS) retiree, huh?
Funny, that same Tier I retiree was an outspoken proponent of breaking the pension promises made to 27 year veteran state employees just last summer.
Let me tell you SteveHC, that felt like stealing, too.
Others brought
Read MoreThanks for all the comments positive and negative.
The fact is that the benefits given to govenment workers at all levels, municipal, state and federal, are among the biggest expenses our nation has. When compared with private sector workers, the 22 million government employees getting retirement benefits ranging from good to extraordinary, makes them the privileged class of American workers.
Connecticut state workers are probably near the top of the heap. I'm sure that Tier one is far better than later ones, but the average retirement payout (pension and medical) is still huge. I'll guess the typical Tier one retiree
Read MoreYou must have missed it, George. Our pensions were already slashed. Retirement age was raised by 3 years, and draconian penalties were instituted to effectively end early retirement as a viable option. A new retirement "tier" was created.
Assuming, very generously, an average retirement length of 20 years for state workers, the 3 year retirement age increase is a 15% reduction. And you're way, way off on your assumed benefit amounts. A typical Tier II, IIa, or III pension of $25k, and 2 years of health care before Medicare kicks, in is no million dollar liability, not even close.
Read MoreIf pension schemes are properly put together, even for-profit businesses can benefit at an ultimate low cost, because any unused pension amount, upon the demise of a retired worker, would belong to the company, and does not pass on to the descendants of the deceased/retired worker. 401(k) plans, on the other hand, may work the other way.
Perturbed,
I must have read a different summary of the SEBAC agreement than you did.
Firstly, already retired workers gave back almost nothing. I think they may be making a nominal contribution to the retiree health care plan, which they never did before, but no affect on their pensions at all. Plus they get to keep the old, over generous health care plan. They continue to get 2.5% minimum, up to 6.5% COLA. New retirees got their COLA reduced by a whopping .5%.
As always, the formulas used to calculate pensions are very generous.
Newer employees do have to work
Where do you come up with $1 million. If the average pension is around $23,000 per year and you live for 15 years after you retire (that would make you around 78) then that would cost approximately $345,000.
George,
You are mostly correct in your assessment of the effects on existing retirees. But no, they don't even have to make any contributions to the retiree health care plan. There was absolutely no change to existing retirees' benefits at all. And that is as it should be, legally and morally. As much as I hate to admit it, SteveHC is correct on that one point.
Though I disagree with the direction the New England Public Policy Center study proposes taking, the address of the PDF is provided below (I hope -- the new, extremely restrictive commenting options here won't
Read More
"This is an investment worthy of being made."
Gov. Malloy to charter school students who had been bused to the Capitol Tuesday evening to thank him for proposing an increase in funds for charters.
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