Connecticut Gov. Dannel P. Malloy's budget chief said Thursday it will be difficult but he plans to adhere to his boss's campaign promise and craft a new two-year state budget that does not increase taxes despite deficit projections.
"It's going to be an enormous challenge, but I look forward to carrying it out," Ben Barnes, secretary of the Office of Policy and Management, told The Associated Press. He added: "We're going to submit a budget that's balanced. It is going to entail spending reductions below the current services level."
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Barnes is in the beginning stages of crafting a budget recommendation for Malloy to present to the General Assembly in February. His comments come a day after he sent a memo to state agency heads, instructing them to "eliminate, minimize or delay those expenditures that are not absolutely critical in nature." On Monday, new revenue estimates showed the current year, which ends on June 30, is short about $59 million in state revenue.
Barnes said Thursday that much of that $59 million stems from late payments from the federal government for various Medicaid initiatives. He called the $59 million a "manageable" revenue loss to overcome.
Meanwhile, a new report is expected to be released Friday that will outline projected cost overruns for the current fiscal year's budget. The General Assembly's nonpartisan Office of Fiscal Analysis has estimated those budget deficiencies to be about $80 million, which Barnes said "is not an unreasonable number." Those overruns include higher-than-expected retiree health care expenses, which Barnes said could change before the fiscal year ends.
State Rep. Themis Klarides, R-Derby, the new House Republican leader for the coming legislative session, said she believes this new projected $59 million revenue shortfall is a sign of bigger problems for Connecticut's budget.
"The reality is, it's a continued erosion of our state's fiscal health," she said, adding how legislative Republicans were critical of the revenue numbers that were plugged into the budget at the last minute to balance the tax-and-spending plan.
Klarides said Malloy disagreed throughout the recent election that the state faced serious budget issues.
"Every TV ad, every debate, every time the governor spoke, he denied there was a significant problem," she said. "But now, together, we have to address it."
The fiscal analysis office has projected a $1.4 billion deficit in the new fiscal year that begins July 1. Malloy said that figure assumes future budgets will spend more than what he plans to present. During a Sept. 30 debate with Republican Tom Foley, who repeatedly criticized Malloy for raising taxes in 2011 to cover a budget deficit, the Democrat said: "I don't believe there will be a budget deficit, and I've pledged that were won't be one and I've also pledged that there will not be a tax increase."
Barnes contends there are reasons to be optimistic, saying retail sales are relatively strong and Connecticut's underlying economy is stabilizing. Also, he also argues that state spending has been well-controlled this year, pointing out that $80 million in cost overruns represents only one half of one percent of the overall state budget. He said the spending limits outlined to agency heads, including the curtailing of new hires, could be lifted as the fiscal situation changes.