Searching For Consensus On State Budget Cuts [Courant]

October 19, 2015

Hartford Courant
HARTFORD — After weeks of scuffling with legislative leaders from both parties over a growing budget shortfall, Gov. Dannel P. Malloy abruptly changed course Monday and declared that he is ready to work with lawmakers to pare spending.
The governor’s surprise announcement came as his budget office released troubling new revenue projections. Malloy, a Democrat one year into his second term, attributed the state’s budget problems to stagnant wage growth and a downturn on Wall Street.
“More hard decisions are going to have to be made and I’m here to say we should make them together with each party involved,” Malloy said during a mid-morning press conference outside his state Capitol office.
Malloy will present his plan next week. He invited Republican and Democratic legislative leaders to join him in discussions and said he plans to call the legislature into session later this year.
In addition to the immediate need for cuts brought on by a new shortfall that tops $118 million, Malloy said he wants to expand the discussion to address a more fundamental matter: Which programs and services can the state afford to pay for as it adjusts to an era of diminished growth?
“Let’s use the reality of this moment to have a real public debate about how we can improve our budget [and] grow our economy,” Malloy said. “We must live within our means … that means reducing spending on items that might be worthy but ones that the state can no longer afford.”
He added: “I believe we have to adjust expectations and realize we have a post-recession economic reality … we must define government’s core services and what government can fund, year after year.
“Everything is on the table,” Malloy declared. While this does not include additional tax increases, Malloy left the door open for concessions from state workers. He noted that Connecticut is currently negotiating with a number of public employee unions and “they’re going to be very tough negotiations.” But pressed on specifics, Malloy said he was not going to broker an agreement in the news media.
Republican leaders — who have long complained they have been frozen out of budget deliberations — said they were pleased Malloy has invited the GOP to the table.
But Senate Minority Leader Len Fasano and House Minority Leader Themis Klarides questioned the governor’s budget numbers.
“We think the first thing we do when we get to the table, in my view, is that we all have to agree what this budget deficit is,” said Fasano, R-North Haven. “You can’t fix something … [when] you don’t know what you’re trying to fix.”
The Malloy administration attributes the state’s weaker-than-expected revenue stream to two factors: volatility on Wall Street, which reduces capital gains taxes, a key component of the state’s budget picture, and stagnant wages, which means lower withholding taxes.
Nicholas Perna, an economic adviser to Webster Bank, said the size of state government needs come into line with fiscal reality. “It’s one thing to blame Wall Street because nobody likes Wall Street,” he said. “We haven’t done the things that need to be done.”
Malloy’s offer to engage in talks with lawmakers won him praise from legislative leaders from both sides of the aisle. His relationship with members of the General Assembly has been frosty since he ordered $103 million in emergency spending cuts late last month. The cuts, which disproportionately fell on hospitals and human service providers, were roundly slammed by legislators.
Democrats in the two chambers had been prepared to release their own proposed spending reductions to replace the hospital cuts: Their plan would have trimmed spending by 2.5 percent across the board.
“This approach would have helped maintain the critical services that thousands of families rely on every day, and keep much-needed local property tax relief intact,” House Speaker Brendan Sharkey said.
Malloy’s rhetoric on Monday toggled between conciliatory and combative, as he challenged his political opponents to bring ideas to the table.
“Many have decried the hard decisions that I have made over the last month yet those same individuals are unwilling to discuss alternatives,” Malloy said. “I’m not afraid to make these cuts … in fact, I deliver bad news personally. I’m not afraid to make the decisions that have to be made. I know they’re difficult.”
Fasano declined to list specific programs and services he believes ought to be cut. “You want to have a conversation about numbers? Let’s have a conversation about numbers, not through the press, not through some idea … without any context,” he said. “We have a list of ideas and we’ll share them when we get into the room.”
Malloy’s announcement came just six days after a new Quinnipiac University poll showed his approval rating at its lowest since taking office. Just 32 percent of voters said they think the governor is doing a good job. And only 19 percent support his handling of the state budget.
But Malloy said his decision to offer an olive branch to lawmakers was not prompted by his poor poll numbers. “I don’t think leadership ever gets you good numbers,” he said. “There have been people who go back to the well to criticize that which I have done. I understand it. Quite frankly, I have pretty broad shoulders.”
But, he added, “these people keep saying there’s got to be other ways to do it. I’m calling their bluff.”