Republicans Criticize Level of Borrowing – Malloy dismisses GOP’s state budget concerns [AP]

November 20, 2014

The Associated Press

Democratic Gov. Dannel P. Malloy downplayed the mid-year spending cuts he needs to make to cover an approximate $100 million revenue shortfall, predicting Connecticut ultimately will end this fiscal year on June 30 with a surplus.

Malloy said his administration plans to make some “minor adjustments” to the current $20 billion budget. He said some, but not all, state agency budgets could be cut by 1 to 5 percent. He did not elaborate. The governor’s budget-cutting plan is expected to be announced sometime this week.

“We make adjustments on an ongoing basis, based on expenditures and income,” Malloy told reporters following a meeting of the State Bond Commission. “So, my prediction is, we end the year with a surplus, not a deficit.”

Republican lawmakers contend the budget is more troubled than what Malloy has been portraying.

“The state is in a financial crisis because warnings that Connecticut was headed down the wrong path have been continuously ignored,” said Sen. L. Scott Frantz, R-Greenwich.
State Rep. Vincent Candelora, R-North Branford, said he’s not surprised news about the state budget has worsened since the election, from a modest surplus to a potential deficit. He said more up-to-date revenue projections are being released publicly now because Malloy and the General Assembly’s majority Democrats decided to reveal such information after the election instead of October.

“They didn’t want the voters to know the true economic picture of the state of Connecticut prior to an election,” Candelora said.

Despite Malloy’s continued promise that he won’t increase taxes to balance next year’s state budget, which faces a projected $1.4 billion deficit, Candelora predicted tax increases could become part of the debate when lawmakers return to the state Capitol in January.

“They’ve never had an appetite to reduce spending and get Connecticut in line,” said Candelora, referring to Democrats.

Republicans also criticized Malloy’s level of borrowing. Sen. Len Fasano, R-North Haven, the incoming Senate minority leader, said the allotments approved by the State Bond Commission, which Malloy’s chairs, pushed the state $167 million beyond the governor’s self-imposed $1.8 billion cap on borrowing. He called such borrowing “extremely worrisome” given the state’s current fiscal health.

Also, the GOP seized on a letter dated Tuesday to lawmakers from State Treasurer Denise Nappier, who said she was temporarily transferring money from bond proceeds to cover state operating expenses.

Malloy said one of the reasons Nappier, a fellow Democrat, made the transfer was to help make up for more than $200 million in expected federal Medicaid reimbursements the state has not yet received from Washington. Nappier noted in her letter that the state’s overall cash balances remain adequate, with roughly $1.1 billion available as of Nov. 15.