Sen. Kane Calls for Monthly Non-Partisan Budget Reports (Journal Inquirer)

November 17, 2014

Article as it appeared in the Journal Inquirer

State deficit nears $100M

Both Gov. Dannel P. Malloy’s budget office and the legislature’s non-partisan fiscal analysts said Friday that the state is facing a projected budget deficit nearing $100 million.

The non-partisan Office of Fiscal Analysis said the state’s $19 billion budget is on pace to be $89.1 million short by the end of the fiscal year.

Malloy’s Office of Policy and Management pegged the figure just hours later at $99.5 million. The two reports also forecast deficits exceeding $1 billion in each of the next two fiscal years, citing both expected increases due to current services and revised revenue projections.

OPM Secretary Benjamin Barnes said the state has already taken steps to balance the budget.

“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 there will be no deficit,” he said Friday.

On Wednesday Malloy issued a hiring freeze in all state departments of non-essential staff. Barnes also said emergency spending cuts would follow.

Friday’s projections came just four days after the two offices issued a joint statement projecting the state’s revenues this fiscal year will be $59.1 million less than budgeted.

OFA also projected Friday that the budget is facing $84.6 million in “deficiencies,” or budget shortfalls, that will be offset by only $54.2 in savings, resulting in an overrun of $30.4 million.

That would turn a budgeted surplus of $400,000 last spring into a deficit of $89.1 million.

Both reports said Medicaid expenditures have caused the Department of Social Services to have the largest shortfall so far.

OFA projected a $40 million deficiency, due to pharmacy expenditures that have been 11 percent higher than normal, and a new federal law that requires states to cover treatments for children with autism spectrum disorder.

Coverage is expected to begin Jan. 1, and the state is still developing a plan.

OPM, meanwhile, forecasted the deficit at $30 million and said it’s the result of a “small percentage of clients” who now fall into a 50-percent Medicaid reimbursement, down from 100 percent.

OFA also projects a $31.8-million shortfall in health benefits for retired employees, due partly to a newly approved Hepatitis C treatment program that costs approximately $94,500 and an increase of 3,000 retirees over what was anticipated in the budget.

Malloy’s budget office didn’t report a deficiency, but did say it’s monitoring the accounts.

The two offices also project deficits for the Department of Emergency Services and Public Protection, due largely to overtime costs within the state police.

OPM projects a $4 million deficit in this account, while the non-partisan OFA only projected a $2.5 million. OFA also reported an $8 million overrun in the Correction Department’s budget for similar reasons.

Both reports also found a shortfall in allocated funding for assigned criminal defense counsel, or public defenders, due to an increase in habeas corpus petitions resulting from a 2012 law that placed five-year limits on such petitions.

OFA projected the deficit at $3.7 million, while Malloy’s budget office said it’s $3.8 million.

OFA also projects the state will face deficits of $1.321 billion in the 2016 fiscal year and a $1.439 billion in the following fiscal year.

OPM, meanwhile, projected deficits of $1.095 billion and $1.032 billion, respectively.

The projection from Malloy’s budget office stands in stark contrast to his repeated statements on the campaign trail that he didn’t think the state was facing a deficit in the upcoming fiscal year.

OPM said the projections are based on revenue forecasts the department reached in consensus with OFA this month.

The sudden change in projections has drawn criticism from Republicans, who have accused Malloy of playing politics and then revealing new numbers shortly after the Nov. 4 election, when he earned a second term in office.

State Sen. Robert Kane, R-Watertown, said Friday that he will propose legislation this session that would require OFA to submit monthly budget reports.

State law currently requires OFA and OPM to submit such reports by mid November, after an election, to the legislature’s Appropriations and Finance Committee.

On Oct. 20 OPM told the office of the Comptroller that the state budget had no deficiencies and was on pace for a $300,000 surplus. Malloy said that he agreed with the projection.

But Republicans asked for a preliminary analysis from OFA, which stated on Oct. 31 that the state was facing $83.8 million in deficiencies.