An Administration in Denial

February 1, 2012

I try not to write articles which can be perceived as having a political slant; however, there are times when criticism is required because all of us suffer if certain issues are not brought to light. Such is the case with our state budget.

Denial is dangerous because it blinds a person from analyzing their decisions.

“There are none so blind as those that will not see.” The proverb has been traced back to Biblical times, but fits the current administration’s denial regarding our state’s lack of fiscal stability.

According to objective spectators we are on shaky ground at best. There has been a serious of warning signs that our budget – pushed by Gov. Malloy is beginning to collapse.

First our budget deficit has deepened. In early January the Office of Fiscal Analysis (OFA) – a bipartisan office of actuaries reported that in the first five months of the new fiscal year (July to July) a state surplus of $88 million has evaporated. The current budget shortfall is now $145 million according to OFA.

The end result of all of these discrepancies and denials is that the taxpayer suffers. We as taxpayers will pay for it.

State Senator Len Fasano

Our Governor’s response to the state’s fiscal news came as he was in the Swiss Alps attending a world economic summit. Malloy said, “OFA has it wrong.” In the legislature the golden rule is that if OFA advises the economic impact of any bill, it is taken for full faith and credit even if we disagree. This is the common ground for which all the entire legislative branch operates.

Gov. Malloy’s statements fly in the face of the very rule for which all legislators live by. Further, if OFA is not reliable as the Governor suggests then one has to wonder why the Governor’s Office of Policy and Management Chief, Ben Barnes invoked the OFA four times in a recent opinion piece to substantiate various fiscal arguments.

The second warning sign came after a recent report by private pension fund actuaries showed Connecticut’s pension fund remains in poor fiscal shape. As a result, questions have surfaced as to how much the state will actually save from the pension package negotiated in the union concession deal.

Governor Malloy claims $21.5 billion will be saved over 20 years. But OFA has been unable to validate some of the savings. Additionally, GOP leaders in both the Senate and the House requested OFA compare the numbers from the private pension fund report and the results from OPM’s analysis. OFA says the Governor’s numbers don’t add up. And infact will fall short by 65 percent.

The third warning sign and most telling, a downgrade of the state’s credit rating by Moody’s Investment Services. Skyrocketing pension and healthcare costs have caught up with a democratically controlled legislature who voted to put off payment into the fund because spending was more important.

Governor Malloy’s response, “We are in an environment where rating services are for lack of better term covering their back side.” The OPM Secretary decided to just go for the jugular claiming, “Moody’s is wrong.” The denial continues.

The fourth warning sign of fiscal collapse: inadequate cash flow. In December despite the anticipation of new revenues coming in – the state ran out of cash and had to use bonded funds (borrowed money) to pay employee salaries and pay operating bills.

The administrations answer to all of these warning signs is to ignore the facts and say everyone else is wrong.

You may hear the Governor is using his recessionary authority to cut $79 million from the budget and that he’s consolidating agencies. These are feel good answers. More than half of the recessionary cuts have already been counted in the budget according to the governor’s own staff.

The end result of all of these discrepancies and denials is that the taxpayer suffers. We as taxpayers will pay for it. I forewarned of this exact result back in March of 2011 when I wrote:

The Governor’s central argument for proposing a $1.5 million tax increase is that the state’s fiscal crisis would be solved. (Remember “shared sacrifice?”)

  • state employees would sacrifice through union concessions
  • taxpayers would sacrifice through increased taxes
  • state government would shoulder its share of the burden by vastly reducing spending

We have yet to see government truly reduce spending, the union concessions are not adding up but taxpayers are paying and paying dearly.

It’s time to stop denying what is painfully obvious the Administration’s plan is not working.