GOP says Lembo ignored deficit to shield Malloy [CT Mirror]

February 4, 2015

CT Mirror
Connecticut’s budget debate boiled over late Tuesday as the legislature’s top Republicans charged that Comptroller Kevin P. Lembo’s political affiliation has trumped his fiscal integrity.

Armed with an updated, nonpartisan report showing this year’s deficit already exceeds an emergency action threshold, Sen. Len Fasano and Rep. Themis Klarides accused Connecticut’s chief fiscal watchdog of ignoring red ink to help Gov. Dannel P. Malloy – a fellow Democrat – save face.

The report issued late Tuesday by the legislature’s nonpartisan Office of Fiscal Analysis shows “you can’t trust Governor Malloy’s numbers and you can’t trust Kevin Lembo’s numbers. This is more politics-before-people, and that is sad,” Fasano said. “We see total capitulation and that’s very scary.”

At issue are three snapshots of where the state’s $17.5 billion general fund – which covers the bulk of annual operating costs – will be when the fiscal year ends on June 30.

Malloy, who insisted throughout last fall’s campaign that there wasn’t going to be a budget deficit, hadn’t reported any shortfall until mid-November, just after being re-elected to a second term.

Klarides and Fasano, leaders of the Republican minorities in the state House and Senate respectively, have accused the administration of trying to acknowledge the deficit in piecemeal fashion. If the comptroller certifies a deficit topping 1 percent of the general fund, or about $174.6 million this year – the governor is required to submit a deficit-mitigation plan to lawmakers.

Malloy’s budget office issued a $121 million deficit projection on Jan. 20. The governor then ordered agencies to trim spending by $31.6 million.

Shortly thereafter, legislative analysts identified about $80 million more in potential cost overruns not listed by the administration, including health care and magnet school expenses.

In addition, the governor’s emergency cuts don’t always reduce the deficit by an equal amount.

That’s because every state budget is balanced, in part, on “lapses” – assumed savings targets that agencies are expected to achieve throughout the fiscal year. And the governor’s emergency cuts often cancel at least some spending that agencies already had planned to suspend to achieve savings targets. When that happens, the governor rescinds spending that already effectively had been cut, saving the state nothing.

Republican legislators were surprised Monday when Lembo not only accepted the administration’s $121 million deficit projection, but also assumed the $31.6 million in emergency cuts would involve no duplication.

Lembo, who reported a deficit projection of $89.4 million, did not reject the concerns raised by legislative analysts, but noted that the administration has a strong track record of meeting savings targets built into past budgets.

But legislative analysts, who finished their review of the governor’s latest cuts, concluded they only effectively saved the state about $20 million.

More importantly, OFA said the deficit actually stands at $182.3 million. That’s $7.7 million above the level that triggers a formal gubernatorial plan to balance the books, and $92 million worse than Lembo’s estimate.

“My projections are based on careful and thoughtful analysis, and historical trends,” the comptroller wrote Tuesday in response to the GOP leaders. “My analysis and opinions are my own. It seems to defy logic that, when I disagree with the governor, I’m characterized as an independent and honest voice, but when I agree — even in part — it’s considered partisan. It will take a tremendous amount of hard work and focus to guide us out of this recession. Thoughtful people need to work together. As always, I look forward to working with both my Democratic and Republican colleagues on smart financial solutions.”

“It is ironic that legislative Republicans would criticize the administration for failing to deal with any problem,” Malloy’s budget director, Benjamin Barnes, wrote in a statement. “Governor Malloy is implementing tough cuts and also developing a budget and legislative program to close the gap in the coming biennium and address any current year deficiencies.”

Malloy’s proposal for the next two fiscal years – which face projected deficits topping $1.3 billion and $1.4 billion, respectively, is due to lawmakers on Feb. 18. Barnes added that though this is not far off, “we can expect two weeks’ worth of press releases and not a single detail about how to address our fiscal challenges.”

Fasano and Klarides, who insist Republicans have cost-saving ideas – but haven’t released any specifics to date – again called for bipartisan negotiations. “The state deficit is growing faster than the governor can make cuts to the budget,” they wrote in a joint statement. “It’s time to put politics aside, recognize the full scope of this problem, and formulate a real solution.”