As July 1 deadline passes, state is still without a budget

As the General Assembly remains unable to move forward with either an adopted two year budget or a shorter term temporary fix, the State of Connecticut has now begun the new fiscal year without a budget. The deadline of July 1 came and went, with frustration and disappointing coming from both sides of the aisle, along with the governor’s office.

The legislature has been struggling to deal with a massive deficit that looms for the coming biennium — up to about $5 billion. To intensify the problem, income tax receipts have been far lower than projected, which has only ballooned the deficit number and forced both parties to account for another $1.5 billion for the biennium. A third casino, legalized marijuana, and the adding of tolls to highways have all been discussed in efforts to impact the revenue side of the budget, while a sales tax hike to 6.99% is on the table as well.

A concession deal between state unions and Governor Dan Malloy has yet to be ratified by the legislature, and it is looking increasingly as though that could be a long road. While Republicans in the legislature have been vocal that the concessions agreed to by Malloy are not enough, late last week the CT Mirror reported that some moderate Democrats are of the same opinion. The concession deal is projected to be worth just under $1.6 billion over the next two years, however it extends the current contracts of state employees until 2027 instead of ending in 2022. There would also be a wage freeze of three years for workers, which is what creates the bulk of the savings. Connecticut taxpayers would still be on the hook for paying for the bulk of those benefit packages.

Malloy signed an executive order which allows the state to remain running without a budget. Part of this order means that Malloy alone is responsible for managing the state finances and budget until the new budget is agreed upon. State parks are open for the holiday weekend and the state is able to run on bare bones expenses for the time being. Still, the longer Hartford goes without a budget, the more damage is done to social services, transportation, and other government services that go without money, only costing taxpayers more.

“Connecticut can and will adopt a responsible, balanced budget for the coming biennium – the question is how best to handle our finances until that happens,” Governor Malloy said in a release.

“I am prepared to operate government in the absence of a budget, but it has never been my preference to do so. That’s why I’m offering this proposed mini-budget to the General Assembly. It is a responsible, short-term option that allows us more time to negotiate a full budget, without making our current problems any worse and without further jeopardizing the state’s bond rating. I urge the General Assembly to take up this mini budget before the week is out,” said Malloy.

State Representative Terrie Wood released a statement as well, saying, “This is certainly no way to run state government, and I am hopeful that all sides can find an agreement and pass a responsible budget.  We were prepared on Thursday, June 29, to go into a session and vote on a budget, however majority Democrats in the House refused to take action, perpetuating our budget crisis.”

“For my part, I will only support a budget that respects our towns and cities’ education grants, and does not pull the rug out from under them long after their local budgets have been passed because the state can’t properly manage its business. Also, I will not support a budget that raises taxes and fees on our already overtaxed residents and businesses. It is clear now more than ever after the governor’s two massive tax hikes in 2011 and 2015, that tax increases have done far more damage than good in restoring our economy and jobs,” added Wood.

State Representative William Tong also weighed in, urging members of both parties to come together for the good of the people of Connecticut.

“I think we need to continue to keep pushing to conclude a budget as soon as possible. I also believe that Democrats and Republicans need to come together now for the good of the state to pass a budget that is based on what we can realistically agree on,” said Tong, adding, “The time for posturing is over. It is time to come together on a budget that prioritizes the long-term economic competitiveness of the state.”

State Senator Bob Duff, who represents Darien as well as Norwalk, also expressed that the current situation is not ideal, and it’s time for the legislature to act.

“Last week, Democrats and Republicans in the Senate were prepared to vote for a budget to cover the first quarter of the fiscal year. Unfortunately, the House of Representatives did not act,” said Duff, adding, “While far from ideal, the proposed single quarter budget was the only plausible and acceptable measure short of universal agreement on a comprehensive two year budget.” The short term budget was a 90 day survival measure that would ensure essential state offices and services would be maintained while a complete two year budget was finished. “Most people - the Governor included - agree that it is not in the best interest of the state for him to be solely responsible for managing the budget. I am committed to continuing to work toward  a solution to move Connecticut forward,” Duff said.

State Senator Carlo Leone did stay in Connecticut last week even as his family began vacation so that he would be able to vote on a mini-budget, but that did not materialize. Leone said, “Right now everyone has their own biennial budget idea: House and Senate Democrats, House and Senate Republicans, and the governor. That's five budgets. Last week I was at the Capitol prepared to vote on a so-called "mini-budget" to cover state expenses for the next few months, but the House would not take it up.”

Leone, like his fellow elected officials, spoke about the desperate need to get a two year budget completed.

“I think right now we're at the point where we have to put together a full, two-year biennial state budget. I know our caucus, Senate Democrats, has senior staff and policy staff and our Appropriations Committee chair fine-tuning our budget plan every day,” said Leone, adding, “Everyone is going to have to give a little, and the Republicans have to come to the table too.”

Leone also spoke specifically about the way in which this process could impact Darien, saying, “What this all means for Darien remains to be seen, but to be honest, I don’t see how cities and towns don’t see some reduction in state aid in the next budget. We've kept them whole for decades through some bad recessions. About 20 percent of our state budget is spent on aid to cities and towns -- there's no way  to cut state spending anymore without touching local aid."

First Selectman Jayme Stevenson sent a statement to the Darien Times, commenting on the budget at the state level and the possible response here in Darien. It is published in its entirety here:

“The state legislatures most important job is to draft and approve a biennium spending plan.  Partisan politics on both sides of the aisle have brought that process to a grinding halt.  The June 7th session deadline came and went with rhetoric but no action creating significant uncertainty for municipalities and more important, our resident and business taxpayers.  Local tax bills are out and reflect the spending plan the Darien RTM approved on May 8th.   Our FY 17-18 spending plan incorporates conservative assumptions regarding state revenue but uncertainty remains in whether our tax levy will be sufficient to cover additional revenue losses, state fiscal mandates or teachers’ pension sharing arrangements that might be drafted into a final biennium plan.  Without a legislatively approved budget, the Governor controls state spending.  I’ve yet to hear anyone agree this is a prudent way to run state government.  State budgeting by executive order harms the most vulnerable in our state by reducing funding to nonprofits and hospitals –  the very backbone of the state’s social service delivery system.  State spending should be reduced but the executive order budget is off the mark in terms of where the priority cuts are being made.

Because there is associated fiscal impact, there are weighty issues that may be reflected in a final budget plan…teacher pension sharing, loss of special education reimbursement funds, higher sales tax, tolls and legalizing recreational marijuana to name a few. I’m told “nothing is off the table” including a redraft of state education funding policy. Of immediate concern is the potential loss of town aid road revenue that we use for summer road repaving and the very real possibility of no education revenue in October, as is the norm. The Board of Selectmen, Board of Finance and staff stand ready to address state budget impacts and will communicate our thinking to the public when we have important information to share.”