Bigger Deficits Forcing State Spending Cuts

Reacting to deeper state budget deficit projections, Governor Malloy and other policymakers are taking action to cut spending and plan for more reductions.
Last week, the Office of Fiscal Analysis projected that Connecticut’s budget gap for this fiscal year has grown to at least $266 million and the deficit for next fiscal year likely to hit $900 million. The state comptroller also projected a $220 million gap for this fiscal year.
Since then, Governor Malloy has called for state lawmakers to reject a new contract for 1,900 UConn professionals that would cost $94 million in wage increases over the next five years.
He also canceled pay raises of up to 3% for about 2,000 non-union state managers and other staff that were to start last week.
And the governor has cautioned that the state employee workforce will have to be “significantly” reduced to meet the budget demands.
In addition:

• The state’s judicial branch has canceled 3% pay raises for 700 non-union staff, to save $1 million this fiscal year and about $2.9 next year.
• Some General Assembly leaders are considering a furlough of legislative staff

More spending-reduction actions are likely, given the state’s fiscal condition.
OFA says income tax projections have fallen by $464 million this fiscal year and $878 million in FY 2017.

But policymakers are nervously eyeing the income tax deadline of April 15 for indications of how actual revenues will come in this year.
In his State of the State address, Governor Malloy cautioned that the state is experiencing “new economic realities” that must force Connecticut to change its fiscal ways.
As the business community has for many years, the governor called for state government to focus on its core responsibilities, take advantage of opportunities to save taxpayer dollars and better deliver services, and adopt zero-based budgeting.
State lawmakers and the governor will have to work on a budget solution to close the gap for this fiscal year by June 30, but preferably before the end of the legislative session at midnight on Wednesday, May 4.
Tough choices will have to be made, and working together, we can ensure a bright future for Connecticut. The governor has called for bipartisan talks to accomplish that task.

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For more information, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco