Fasano: How did they not see this coming? – Gov’s Budget Office Project Deficit [CT News Junkie]

November 17, 2014

CT News Junkie
Gov. Dannel P. Malloy’s budget office issued a report late Friday projecting that the state would end the year with a $99.5 million budget deficit. That’s about $10.4 million more than the $89.1 million deficit the legislature’s nonpartisan Office of Fiscal Analysis projected earlier Friday.

The Malloy administration said the $99.5 million deficit was only projected, and would only come to fruition if the state took no administrative action to manage it.

Earlier this week, Malloy administration budget director Ben Barnes wrote to state agencies asking them to reduce spending and to curtail hiring.

“This is consistent with what the administration has been saying — that no matter what the projections are we will manage and administer the budget so that there will be no deficit,” Barnes said Friday. “It is important to remember that this is a prediction of what would happen now and in the future should we do nothing — and doing nothing is not an option.”

Prior to the election Malloy maintained there would not be a budget deficit. It’s a position he can still maintain because Connecticut law requires the state to end the fiscal year with a balanced budget.

Before the election, both Malloy’s budget office and state Comptroller Kevin Lembo projected that the state would end the fiscal year with a $300,000 surplus. But the more than $80 million in potential cost overruns and the more recent $59.1 million in lagging revenue pointed to problems on both sides of the budget ledger.

“Now, we are staring into a big budget hole. How does that happen? How did they not see this coming?” Sen. Len Fasano, R-North Haven, said Friday. “Either the comptroller and the governor completely missed this, or games are being played with state budget numbers.”

Fasano noted that nonpartisan budget officials pointed to more than $80 million in potential budget deficiencies on October 31.

“Our non-partisan budget staff saw the problems looming, but then again, they weren’t up for re-election,” Fasano said. “Governor Malloy and Comptroller Lembo have some explaining to do.”

Rep. Themis Klarides, R-Derby, said the only person in the state who seemed to think there was a surplus was the governor.

“It’s amazing the governor claims he didn’t see it coming,” Klarides said.

She said the structural issues in the budget have built up over the past four years and they aren’t going to disappear overnight. She said the first step to realizing you have a problem, is admitting you have a problem.

“The governor did that,” Klarides said. “Now, we need to work together going forward.”

On the campaign trail, Malloy promised no new tax increases.

Barnes said Friday that “raising taxes is not an option.”

“Any budget issues will be resolved by prudent decision making and difficult choices, should they be necessary,” he added. “Solving the problems the first year will go a long way toward eliminating issues projected for the succeeding years.”

Both OFA and Malloy’s budget office found the deficits get bigger in future years.

According to OFA’s Fiscal Accountability Report released today, the state will face a $1.32 billion deficit in 2016 — up from a $1.278 billion projection a few months ago — and a $1.4 billion deficit in 2017. Malloy’s budget office estimates a $1.095 billion deficit in 2016 and a $1.032 billion deficit in 2017.

The projected $99.5 million deficit for this year is below 1 percent of the operating budget, which means Malloy has the authority to manage it without legislative approval.