State Budget Gap Filled Without Cuts to Towns

In a move that will likely ease the concerns of municipal governments, Gov. Dannel P. Malloy announced late Friday night that he has a plan to fill a $400 million gap in the state budget that relies heavily on increases in revenues while leaving municipal aid intact.

That plan consists of about $80 million in spending cuts over the next two years and uses about $320 million of state surplus funds.

The hole in the state’s budget was a concern for  and their , since many have recently adopted their own budgets.

Earlier this month,  was tight-lipped about where the money would come from but indicated that everything, including funding to towns, was still on the table.

“All I can say is that I anticipate that’s going to be made up of additional spending cuts,” he said.

While additional spending cuts will make up only about a fifth of the shortfall, town funding remains untouched.

Rep. Bryan Hurlburt, D-Tolland, said that will be a huge help to local municipalities.

“The governor and his administration realize it’s bad policy to roll the burden downhill to property taxes,” he said. “I applaud them.”

Hurlburt conceded the budget isn’t perfect, given the opportunity he would make a few changes of his own, but he said given the realities of the state’s financial condition it’s the best that could be hoped for.

Rep. Kathleen Tallarita, D-Enfield, was less enthusiastic about the budget and its $1.4 billion in tax increases.

“We didn’t necessarily look under all the rocks [for places to cut spending] before we passed our budget,” she said.

She too was glad to hear a plan was reached without cutting municipal aid. Enfield recently passed its own budget, which included no tax increases.

If the governor’s administration had been unable to close the gap without cutting funds to towns, that budget would have had to be reevaluated, she said. Either the town would have had to raise property taxes to make up the difference of it would have needed to cut more social services.

“You never want to cut services, especially in times like these. People need those services more than ever,” she said.

Sen. Steve Cassano, D-Manchester, said the announcement is significant for all municipalities, since close to half have adopted their own budgets already. Had the administration decided to cut town aid at this point it would have sparked a “battle royal,” with municipalities struggling for a piece of the remaining state funds, he said.

Manchester has already passed what Cassano called a good budget with a low tax increase.

Not everyone liked what they read in the governor’s plan. Republican leaders were quick to highlight the lack of spending cuts included.

 “Classic Malloy,” House Minority Leader Larry Cafero said standing in the Capitol press room less than an hour after the press release hit email boxes.

“He says one thing, does the other. Says one thing, does the other. There isn’t a real cut in this page, I don’t believe,” he said.

On Friday night, Cafero and Senate Minority Leader John McKinney claimed the governor had said he would close the $400 million gap by cutting spending.

However, on a conference call with reporters Malloy’s budget director Ben Barnes said the governor said no such thing.

“He never said that. He said the $400 million gap would be made up with a mix of spending cuts and revised revenue estimates,” he said.

Barnes said the decision to rely mostly on surplus funds was a compromise intended to honor commitments to local governments, the state’s social safety net, and state employees.

“In a perfect world we wouldn’t have had to make that decision, we thought it was the best decision available to us,” he said.

But Republicans said it was Malloy’s plan from the beginning to hit up the taxpayers first and keep spending for the next two years higher than spending for this year.

Cafero and McKinney bristled at recent statements from Malloy, saying Republicans should support the budget because the surplus they referenced would be used for things conservatives have called for in the past. The governor had said the additional funds would go to paying down the state’s debt, instituting Generally Accepted Accounting Principles and replenishing the “Rainy Day Fund.”

“He said that because we challenged what he would do with the surplus and he was adamant and steadfast that we should support him,” McKinney said.

Barnes said the surplus funds will still be used for all the things they planned to use it for including the transition to Generally Accepted Accounting Principles. There will just be less of it to use.

Despite all the commentary on the failings or virtues of the state’s budget, Cassano said it’s too soon to tell what impact it will have on the state.

“In the real world it will take a year or two to know the effects it will have,” he said. “We can all take our shots right now. But in a year we’ll have a real picture.”