Tuesday, September 25, 2012 4:17 PM Statement from Senate Minority Leader John McKinney (R-Fairfield) re: the OPM report, Changing How Connecticut State Government Does Business:

September 25, 2012

"Governor Malloy increased spending $1.4 billion over two years. That is indisputable fact that even his creative math cannot erase. The Malloy legacy after two years is one of record tax hikes, spending increases, deficits and high unemployment. Today’s report was the administration’s latest attempt to rewrite that history and try to protect legislative Democrats a little over a month before the election. Connecticut residents who are sacrificing because of Malloy’s policies will see through this."

Some of the report’s claims (bold) with relevant context and clarification (bullets):
Cut more than $2 billion from the 2-year current services budget

  • Comparing the state’s level of spending to the current services level is disingenuous to taxpayers. The administration is trying to hide the fact that state spending continues to increase while the incomes of Connecticut residents and their ability to pay for such a government (because of the largest tax increase in state history) continue to decrease. FACT: State spending increased by $1 billion between FY 2011 and FY 2012.  FACT: State spending is scheduled to increase another $400 million between FY 2012 and this Fiscal Year. Given the administration’s track record (5.5% spending increase last year); it is likely to increase even more.
  • The state’s current service budget is really a “what the state would do if it were extremely flush in cash” budget.  For instance, a current services budget assumes that all state employees will receive a 4.5% wage increase in each of the two years.  Given the state’s economy it is unrealistic to assume that all employees, including managers, will receive a wage increase.  Especially not a 4.5% wage increase.  In addition, there are various private provider rate increases, new programs, new agencies, etc. that are authorized and reflected on a current services budget that will not be instituted.

Other considerations:

  • The administration is counting on expenditure reductions for FY 2013 – which have not yet materialized.
  • The current budget is already in deficit by $26.9 million; therefore deficiency appropriations may be needed prior to the end of this fiscal year in order to balance the budget which will result in a higher growth rate between FY 2012 and FY 2013.

Held budget growth to rates lower than the two previous administrations

  • The report compares the growth rates between FY 1996-2005, FY 2006-2011, and then the adopted FY 2012-2013 all funds budgets which show that the adopted growth rates for this one biennial budget is lower than the other budget growth rates displayed.  This overly simplistic math exercise fails to account for the state of the economy.  While forming the FY 2012-2013 biennial budget the state was in the middle of a major recession.  When previous administrations were faced with recessions, actual reductions to state expenditures or approximate level funding were enacted, not $1.4 billion in new spending.
  • In addition, the FY 2013 revised enacted all funds budget of $20,543.1 million reflects a 7.2% increase over FY 2011 all funds actual expenditures of $19,168.7 million not a 3.3% growth rate as computed by the administration.

Reduced long-term liabilities by over $20 billion

  • This figure reflects the governor’s estimate from the overly inflated savings as represented in the SEBAC 2011 agreement.  Recent actuarial revaluations show the following: state employee pension unfunded liability decreased from $11.7 billion to $11.0 billion.  The unfunded liability of the State Employee Post Retirement Health and Life (commonly referred to as OPEB) has decreased from $26.6 billion to $20.0 billion.  These reductions total $7.3 billion.  The nonpartisan Office of Fiscal Analysis even disputed the claim of the level of pension savings that the administration put forward.  The governor lost an opportunity to achieve real pension and healthcare savings with SEBAC 2011.  In the end, a two-year wage freeze and no-layoff provisions tied the state’s hands. 

Started funding the Rainy Day Fund

  • The only reason why the Rainy Day Fund has monies is because the administration and the Democrat majority decided to swipe monies that should have been used to pay down debt to bail out the governor’s failed budget.  The stealing of these funds will result in Connecticut taxpayers paying an $8 million more than they need to because the governor decided to ignore the deficit and not make the spending reductions necessary to bring the state’s expenditures in line with state revenues (once again, revenues at a level after the imposition of the largest tax increase in state history).  This is not an example of them “putting the state’s finances back in order.”

“We have turned around the uncontrolled growth in costs. And we have weaned ourselves from one-time fixes and gimmicks”

NOT TRUE – over the past two years spending has increased by $1.4 billion.   This is a very aggressive spending increase in the middle of a severe economic recession.  The governor balanced his failed FY 2012 budget with a one-time fix.  In addition, the administration and the Democrat majority also used one-time fixes and gimmicks in their FY 2013 midterm adjustments in order to sustain a $400 million increase in spending.  These one-time fixes include using $15 million of FY 2011 surplus monies as revenue in FY 2013, reducing the STF transfer by $70 million, swiping $8 million from the Banking Fund, and moving numerous items from the operational budget to the capital budget.