Fasano Asks Governor to Share Balanced Budget, Lamont Budget Has Over $950 Million in Questionable Savings

April 24, 2019

Connecticut Senate Republican Leader Len Fasano (R-North Haven) wrote to Governor Ned Lamont asking that he stay true to his commitment to present a balanced budget to the legislature before the General Assembly’s budget committee deadlines. As it stands today, the budget Gov. Lamont presented to the legislature in February is currently out of balance and relies on at least $950 million in questionable savings.

Below is the full text of Sen. Fasano’s letter to Gov. Lamont. 

Governor Lamont:

As the deadline approaches for the legislature’s budget writing committee to put forward a balanced budget proposal, Connecticut needs its governor to lead. While you have repeatedly stated that your primary goal as governor is to produce an honestly balanced budget, as it stands today your budget proposal has structural deficiencies totaling over $916 million in the General Fund and over $35 million in the Special Transportation Fund over the biennium. The reality is on top of your proposed billion dollar tax increase your budget still does not balance. In addition, just days away from the legislature’s budget deadline, you have still failed to provide any details regarding the progress of your negotiations to secure multiple massive savings initiatives counted on in your budget.

When the Democrat-led Appropriations and Finance committees come out with their budget proposals next week, no one should be surprised if they don’t match up as we have seen these committees do before. Now is an important time for you as governor to set the tone for our state, to offer a balanced and gimmick-free budget proposal, and to be honest about your negotiations to achieve savings. Connecticut needs a governor that will lead.

The following details areas of major concern within your budget. Currently, these factors together leave your budget over $950 million out of balance. Even if you are able to achieve your anticipated savings from the reamortization of the State Employment Retirement System and the Teachers Retirement System, which we have yet to receive any details about, your budget would still have structural deficiencies of $310 million in the General Fund and the STF would be down $5.5 million from what is stated in your budget over the biennium.

In your State of the State address you made it clear that when it comes to the state budget you want “no more funny math or budgetary gamesmanship. I come from the world of small business where the numbers have to add up at the end of the month or the lights go out.” I ask that you uphold your commitment to producing a gimmick free budget that balances. As governor, you can set the tone for the lawmakers in the state Capitol by putting forward a forthright and balanced budget. We can debate the details and we may find agreement or disagreement about what is included or excluded from a budget. But first we need to see the leader of our state put forward a budget that is honest, that balances and that is free from the gamesmanship you have promised to eliminate.

As governor of the state of Connecticut you also have an obligation to sign a balanced state budget and make adjustments to the state budget if ever faced with a deficit. Given this constitutional and statutory obligation, I hope you will want to address the following issues within your FY 2020/2021 budget proposal immediately so that the legislature has an honestly balanced budget proposal from your office before the Appropriations and Finance, Revenue and Bonding committees present their budget proposals.

  1. You have conceded that you will not secure changes to cost-of-living adjustments. This creates a $54.6 million hole in your budget. On April 9, 2019 you indicated in an interview with the press that you would not be able to secure new limits on cost-of-living adjustments to pensions, a concession you proposed in your budget and counted on for savings. Your budget office relied on this policy to achieve a savings of $26 million in the General Fund and Special Transportation Fund combined next fiscal year and $28.6 million in 2020-21.
  2. You rely on lapse gimmicks totaling over $38 million in year one and nearly $47 million in year two. Under state law, to ensure the separation of powers of the three branches of government, the executive branch does not have the authority to modify the budgets of the judicial branch, legislative branch or ethics/transparency offices. After allocating typical lapses in the General Fund and Special Transportation Fund that have been historically implemented in state budgeting totaling $33.5 million, your budget office doubled down. Incredibly, your budget includes additional back of the budget lapses in the judicial branch totaling $25.6 million in FY 2020 and $32.1 million in FY 2021; lapses in the legislative branch totaling $12.7 million in FY 2020 and $14.7 million in FY 2021; and lapses in the Office of State Ethics, State Elections Enforcement Commission and Freedom of Information Commission totaling $69,507 in FY 2020 and $87,714 in FY 2021.
  3. Under your budget, Special Transportation Fund solvency continues to be an issue. As stated above, not securing COLA adjustments you counted on in your budget will mean $5.5 million less going into the Special Transportation Fund. In addition, your budget office has conceded that their revenue assumptions of $185.8 million from proposed tolling are not achievable in 2023. We are concerned about the ratios needed within the operating balance of the STF in order to meet future bond activity. As you are aware estimates must cover a five year period which include the current biennium and three additional fiscal years, as further described in the official statement from the latest bond sale. While it goes without saying that we are adamantly opposed to the diversion of new car sales tax revenue, these additional pressures on the fund are of special concern. Under your budget, the STF would be in deficit by 2022, facing a shortfall of $84.4 million. I know you are aware of this, because in order to prevent the STF under your budget from falling in to deficit a year earlier in FY 2021, your budget borrows $20 million from FY 2020 to close the anticipated shortfall in the fund. As the STF approaches deficit within your budget, our state will struggle to maintain the transportation and infrastructure projects our residents need. The STF will also require further attention if you do not achieve the labor savings you counted on in your budget. If you do not achieve the COLA changes, which you have already indicated you are not going to secure, and you do not achieve savings associated with State Employment Retirement System reamortization, the STF under your budget will face deficits of $36.1 million in FY 2021, $101.2 million in FY 2022, $221.8 million in FY 2023 and $282.7 million in FY 2024.
  4. Questions remain surrounding the amount of savings you can achieve through state employee health care reforms. Your budget relies on approximately $50 million in savings in the first year and $135 million in savings in the second year from changes to state employees’ health enhancement plan, wellness programs and health care price limits with health care providers. We have not received an update from you regarding your progress in securing these savings through negotiations.
  5. You have yet to share details on plans to reamortize of State Employment Retirement System (SERS) and Teachers Retirement System (TRS). Your budget counts on a savings of approximately $234 million in the General Fund and $32.5 million in the Special Transportation Fund as a result of the proposed SERS reamortization. Your budget also counts on savings from the reamortization of TRS totaling $183.4 million in FY 2020 and $189 million in FY 2021. While I gave your administration the benefit of the doubt when you first presented your budget in February, it is now just days away from the deadlines for the state’s budget writing committees and we have yet to see any further details on your progress.

In your State of the State address you made it clear that you are deeply committed to presenting a budget which is in balance not just for a year, but for the foreseeable future. Your budget seems to have failed in both aspects. You have said you want to ensure mayors and first selectmen around the state know exactly what to expect regarding state aid for their local budget making process and give taxpayers around the state confidence; but your budget’s structural deficiencies undermine any confidence that municipalities can have that they are going to receive promised funding. You come from the business sector where bills have to get paid. In this case, this budget is not paying for all the bills.

Therefore, with these deficiencies in mind, I hope you will keep your promise to Connecticut residents and strive to address the above issues before the Appropriations and Finance committees tackle their tough job of balancing a budget. Your direction is imperative to their results.

Len Fasano
Senate Republican Leader