Sen. Kane: Why is Gov. Malloy blaming others for a $60 million mistake? (Waterbury Republican-American)

Malloy budget flips state spending lid
Consultant blamed for cap gap

BY PAUL HUGHES
REPUBLICAN-AMERICAN

HARTFORD — A tight-lipped Malloy administration is blaming an outside consultant for Gov. Dannel P. Malloy proposing a two-year budget plan that violates the state spending cap.

State budget director Benjamin Barnes announced the $53.7 million mistake in a statement issued Tuesday afternoon, as the legislature’s Appropriations Committee was conducting a hearing on the governor’s higher education budget.

The statement pledged the administration will work with the legislature’s budget office to make adjustments to comply with the spending cap.

Administration officials were not commenting Tuesday beyond that statement.

The governor’s budget office calculated the proposed $19.7 billion budget for the upcoming 2016 fiscal year was just $6.3 million under the spending cap, but it used the wrong figures to make that calculation.

The spending limit is actually $60 million lower than originally calculated, and the recommended 2016 budget exceeds the cap by $53.7 million.

Governors are constitutionally and statutorily required to propose budgets that are balanced and below the spending cap.

Sen. Robert J. Kane, R-Watertown, the ranking Senate Republican on the Appropriations Committee, questioned whether Malloy will be submitting a revised 2016 budget.

He said he could not tell from Barnes’s statement, and he will be seeking clarification from the administration.

The reference to working with the legislature’s Office of Fiscal Analysis left Kane wondering if the administration is going to have the legislature take the lead as part of its budget deliberations. In his opinion, he said that would be punting.

“It’s like saying, ‘Sorry, Dad, I crashed the car. Here are the keys. It’s in the garage,'” Kane said.

He also criticized Barnes’s statement as convoluted, saying it fails to spell out in any of its four paragraphs that the recommended 2016 budget exceeds the cap by $53.7 million.

Kane said he suspects the administration was trying to downplay the mistake rather than being forthright about the error.

Republicans in the legislature are contending the governor’s 2016 budget is actually $101 million higher than allowed because the Democratic administration used a budget maneuver to appropriate $47.6 million outside of the cap.

“The governor has sold his budget as being under the state’s spending cap. We knew immediately after receiving it that it was actually over the cap,” said Sen. Leonard A. Fasano, R-North Haven, Senate minority leader.

The administration also initially reported the proposed $20.2 billion budget for the 2017 fiscal year was $135.8 million below the cap. Using the revised data, the cushion is reduced to $80 million, according to the governor’s budget office.

The spending cap limits yearly budget increases to a rolling five-year average of income tax collections or the rate of inflation for the preceding 12 months. It was enacted in 1991 when the state adopted an income tax.

In his statement, Barnes reported an unnamed vendor for the Office of Policy and Management used data from the wrong tax quarter in determining the growth rate in the income tax.

The consultant was later identified as I.H.S. Global Inc., of Englewood, Colo. The company was paid $41,000 to do economic forecasts used to produce the revenue forecast that forms the basis of the governor’s budget recommendation.

Barnes apologized for what he termed the “discrepancy” in the spending cap calculation for 2016. He also committed to working with the legislature’s Office of Fiscal Analysis to make changes to correct it.

According to Barnes’s statement, I.H.S. Global used the wrong data when calculating the growth in personal income between 2008 and 2014. The consultant used information from the fourth quarter of each year, while OFA uses third-quarter numbers in calculating growth rates.

The revised calculation reduced the growth rate by 0.4 percent.

Kane said he plans to inquire about how budget analysts at OPM did not catch this mistake before Malloy presented his budget last Wednesday because the error raises questions about its oversight of I.H.S. Global.