Fasano: “They failed to do their job” – Budget Falls Far Short of Closing Deficit [CT News Junkie]

April 6, 2016

CT News Junkie

The legislature’s Democrat-controlled Appropriations Committee proposed a budget Wednesday that falls hundreds of millions of dollars short of filling the more than $900 million deficit estimate.

Sen. Beth Bye, D-West Hartford, and Rep. Toni Walker, D-New Haven, who chair the budget-writing committee defended their decision to cut about $570 million from the 2017 budget saying they acted responsibly to close the same gap Democratic Gov. Dannel P. Malloy closed when he unveiled his budget on Feb. 3.

Bye and Walker said the spending cuts were difficult and will impact every person who receives some sort of state assistance.
“There are no sacred cows in this budget,” Bye said.

But Malloy and Republican legislative leaders were immediately critical of the decision not to cut the entire $911 million deficit that’s been projected by the nonpartisan Office of Fiscal Analysis.

Devon Puglia, a spokesman for Malloy, said the governor would be putting out a new budget next week that tackles the entire scope of the $911 million deficit projected by nonpartisan budget staff.

“This budget only addresses part of the challenge before us – it is incomplete,” Puglia said.

Republican legislative leaders were equally critical of the decision not to cut the $911 million deficit.

“They failed to do their job,” Senate Minority Leader Len Fasano, R-North Haven, said.

Bye and Walker defended their decision to cut $570 million in spending.

“This is the first step in the process,” Bye said.

She said there is the Finance, Revenue, and Bonding Committee package expected out Thursday and there’s negotiations between Malloy and labor regarding wages and working conditions.

Bye said there are some signs that revenue projections could be better after the April 18 tax deadline. Bye said they are waiting to see what the Finance, Revenue, and Bonding package looks like. However, that committee avoided raising any bills that increased new revenue this year. It did consider a few bills that would reduce revenues to the state.

“These were very conservative projections and we’re hoping that things will turn around,” Bye said of the revenue figures.

Bye said she’s “frustrated” that Malloy would propose coming out with another budget before the Appropriations Committee votes on its budget.

That being said, “we’re going to work with the governor and with Republicans to get to the bottomline we have to get to,” Bye said.

Fasano said he doesn’t know what world Bye and Walker are living in, if they think revenues will increase after the April 18 tax filing deadline.
Falling revenues, especially personal income tax, have driven Connecticut’s $19.9 billion 2017 budget further into deficit.

Fasano said revenues have not gone up in the month of April over the past several years.

“These guys are living in a world that doesn’t exist,” Fasano said. “And that’s why we have budget deficit, after budget deficit, after budget deficit.”

Fasano said they are doing the state a disservice if they think the revenue figures will come in better than projected. He said it’s best to plan for the worst and hope for the best.

Connecticut has about $406 million in its Rainy Day Fund, which isn’t enough to cover the full amount of the deficit.

State Comptroller Kevin Lembo warned in his April 1 letter to Malloy that he continues to be concerned about erosion of revenue as they approach the end of the fiscal year. He said the withholding portion of the income tax showed solid growth in the month of March and is still underperforming on a year-to-date basis. However, there has been some slippage in the sales tax trend and national economic growth projections have moderated.

Lembo pointed out that April’s income tax receipts “are highly dependent on capital gains and bonus payments to workers.”This category of revenue has been exceptionally volatile over the past several decades and is difficult to project given the absence of timely Connecticut specific data on the major factors driving collections in this area.”