Legislative analysts say Malloy rescissions don’t add up as OPM calculated [JI]

December 8, 2014

Journal Inquirer

The legislature’s nonpartisan Office of Fiscal Analysis said Thursday that rescissions by Gov. Dannel P. Malloy’s budget office would reduce a projected budget deficit to $64.5 million because more than half the cuts rely on already identified savings, while others affect federal funds.

OFA said the rescissions to the 2014-15 state budget provide only $25.9 million in new cuts to the budget, or 47.4 percent of the $54.7 million figure that the governor’s Office of Policy and Management announced on Nov. 23.

The legislative agency’s report also said some of the rescissions could cost the state $1.3 million in federal aid.

That means the net impact of the rescissions would be $24.6 million, OFA said, prompting the office to reduce its projected deficit figure from $89.1 million to $64.5 million.

OPM Secretary Benjamin Barnes called OFA’s analysis “reasonable” and said the difference between the two office’s analyses on the rescissions’ impact equates to less than 0.1 percent of the state’s $19 billion budget.

He also said he still anticipates that the state will eradicate its deficit when the fiscal year ends June 30.

“We remain confident that the measures we have taken to date will allow us to be in balance” at the end of the fiscal year, Barnes said. “If circumstances change, we are prepared to take additional actions to ensure that outcome.”

Barnes and other OPM officials have said they will also utilize a freeze on the hiring of nonessential state employees and additional cost-saving measures to cover the deficit.

But top Republican lawmakers said the ongoing discrepancy between estimates from OFA and OPM, which originally projected a $99.5-million deficit, only increases their desire for special session for the General Assembly.

Incoming Senate Minority Leader Leonard Fasano and incoming House Minority Leader Themis Klarides also repeated their belief that the deficit is higher than either agency projects, and said a special session would allow bigger adjustments.

Malloy, a Democrat, is allowed to cut only up to 5 percent from any particular fund or agency budget, with certain portions protected by state statute.

“Bottom line, we know we have a significant deficit, even after the governor’s rescissions,” Fasano, R-North Haven, and Klarides, R-Derby, said in a joint statement. “The longer we wait to address this problem in a productive bipartisan fashion, the more hardship Connecticut taxpayers will face in the long run.”

They also said they want to seek “a long-term solution.” Both OPM and OFA have projected budget deficits in excess of a $1 billion in each of the following two fiscal years.

OFA’s analysis of OPM’s rescissions to the current budget said Malloy’s administration relied on $28.8 million in lapses, or savings, that OFA already had identified when it issued its report Nov. 14 that first projected a shortfall.

Virtually all of the $9.2 million that Malloy’s administration cut from the Department of Children and Families, including to residential programs, come from lapses and produce no additional relief, according to OFA.

OFA said the rescissions would have an impact of only about $20,000 in actual cuts, with the rest coming from lapses that the nonpartisan legislative office already had identified.

All of the $3.2 million in rescissions to the Department of Mental Health and Addiction Services and $2 million of the $5.2 to the Department of Developmental Services were also in form of previously identified lapses, OFA also said.

And two of the actual cuts to DDS could cause the state to lose $1.3 million in federal grants, further limiting their impact on the deficit.

Many of the lapses are based either on programs that are being used below budgeted rates, such as a reduction in DCF’s placements at group homes, or on attrition and delays in hiring at various state agencies.