Sen. Kane: “We have a great opportunity here…to reduce the size of government.”

Malloy To Announce $150 Million In Immediate Budget Cuts

Article as it appeared in the Hartford Courant

Facing a bleak financial picture this year and for years to come, the Malloy administration will announce at least $150 million in immediate budget cuts this week and dramatic policy changes in coming months.

On Tuesday, state budget czar Ben Barnes provided a grim overview of Connecticut’s long-term finances, telling a room packed with lawmakers that Connecticut faces a series of “extraordinarily difficult decisions to reduce spending.”

The state must overcome a $363 million projected deficit for this year and an estimated shortfall of $1.1 billion in 2013-14. Depending on the cuts that the governor and the General Assembly make in the coming legislative session, the state could also be grappling with deficits close to $1 billion in 2015 and 2016.

For state agencies and programs, the fallout will begin to be felt within the next few days, when Gov. Dannel P. Malloy cuts between $150 million and $160 million from the state budget of about $20 billion, the most allowed under state law. State legislators must agree on another $200 million in reductions to balance spending for this year.

“He is trying to dig us out from the hole we are in,” said Roy Occhiogrosso, a top adviser to the governor, who noted that Malloy faced a deficit of more than $3 billion when he took office two years ago. “It’s going to be tough stuff. People are going to scream.”

The long-term picture is a challenge because of rising Medicare and pension costs, declining revenue from gas taxes, stagnant income growth and the lagging pace of the economic recovery. The looming threat of sequestration — automatic federal spending cuts set to start in January — and the wobbly economies of Europe, a major trading partner for Connecticut businesses, also contribute to the uncertainty.

Barnes, who addressed the legislature’s taxing and spending committees Tuesday morning, suggested that significant cuts will be needed, although he provided few specifics. He focused largely on the numbers during his hourlong PowerPoint presentation, sidestepping the political realities of moving a budget through the legislature.

This time around, the governor insists that tax increases won’t be part of the budget-balancing equation. Malloy, a Democrat midway through his first term, has already raised taxes by $1.5 billion and he is not inclined to boost them again, said Barnes, secretary of the state Office of Policy and Management.

Pressed on that point by Sen. Rob Kane, the ranking Republican on the appropriations committee, Barnes invoked Dr. Seuss.

“I have no intention, I will not, I shall not, I do not wish to. I feel like I’m in ‘Green Eggs and Ham.’ We do not like new taxes, Sam I am,” Barnes said.

But, Barnes added, he wasn’t ready to make a “Grover Norquist-style pledge” never to raise taxes because unknown factors, such as Congress changing the way Medicaid is funded, for instance, could sharply change the state’s budget calculations.

“We do not intend to raise taxes to close the budget deficit that we foresee … this year or next year or the year after that or the year after that,” Barnes told lawmakers. “That said, circumstances can and often do change and … if those circumstances were to change in a way that the General Assembly and the governor agreed that tax [changes] were appropriate, I would do that. I’m not going to make an absolute promise, [but] right now, I think our intention not to raise taxes is abundantly clear.”

Although Republicans might have been heartened by the administration’s coolness toward new taxes, they said they were seeking reassurances that Malloy was committed to ensuring that the state lives within its means.

“We all know how we got here. … What I think was missing is how we fix it,” Kane, of Watertown, said after Barnes’ presentation. “We can’t continue to go down this path of spending and hoping our revenues meet those goals. … We have incredible liabilities, both present and future, and we have a great opportunity here to really turn the corner on this budgetary process and the way to do that is to reduce the size of government.”

Some Republicans questioned Barnes’ economic projections, but he noted that the unexpectedly slow pace of the recovery has led to the revision of some of those figures. Two years ago, for instance, the unemployment rate was forecast to be at 5.8 percent by 2014; current projections suggest that the rate will be closer to 7.4 percent. Housing starts have also fallen far short of projections, Barnes said.

Sen. Scott Frantz, R-Greenwich, said he was encouraged by the underlying message of Barnes’ PowerPoint briefing, conveyed in the title of slide No. 9: “Policy changes are required.”

“That’s profoundly important and profoundly different from what we’ve heard out of this office for a long time,” Frantz said. He then asked Barnes whether it signified “a true effort to cut expenses for the benefit of citizens of Connecticut longer-term.”

Barnes noted that the stark choices the state is facing will take their toll, both on the still-fragile state economy and on the human beings who rely on the state.

“I am extremely saddened by the fact that at a time when Connecticut’s economy is struggling, that we are in a position where we must potentially remove a billion a year from it,” Barnes said.

“I recognize and am committed to undertaking those spending cuts, but we do so at great cost and I certainly am not shy about acknowledging that there are those costs, that [there are] services that will not be provided, service providers that will not have income and the economic impacts of that will be negative on the overall economy of the state of Connecticut in the short run,” Barnes said.

But, the budget chief added, doing nothing would present a graver peril.

“In the long run, we have an obligation to balance our budget,” he said. “The alternative is to raise revenues in the future to support spending that we do now. That, I believe, is a greater danger.”