Governor Proposes Plan to Close 2017 Budget Gap
Governor Dannel Malloy this week moved to balance the state’s 2017 budget, proposing hundreds of millions of dollars in additional spending cuts but no tax increases.
He acted just days after the Connecticut legislature’s Appropriations Committee approved a budget that fell well short of addressing a projected $930 million deficit for the 2017 fiscal year–one of a series of looming deficits.
The governor’s rare second budget proposal takes his midterm budget revisions proposed in February and makes additional changes to address the updated reduced revenue estimates for FY 2017, which begins on July 1, 2016.
The modifications resulted in an additional $347.3 million reduction in General Fund spending–$251.7 million in new spending cuts, $6.5 million in new spending, and $102.1 million of expenditures for municipalities being moved from the General Fund to the Municipal Revenue Sharing Fund.
If adopted, the Governor’s revised midterm budget would result in Connecticut ending FY 2017 with a surplus of $3.9 million without raising taxes.
“We must align our spending with the revenue we actually have, not the revenue we wish we had,” the Governor said in releasing his latest budget.
“If we are to do what’s right for the state, if we are to put Connecticut on a better path for the long-term, then we need to make tough but necessary decisions now to adapt to our new economic reality. That’s what this budget does.”
CBIA president and CEO Joe Brennan called the Governor’s budget proposal “tough but prudent,” saying it was critical that Connecticut resolve its budget issues “as soon as possible.
Brennan said that Connecticut has to show it can close budget gaps without tax increases.
Getting the state’s fiscal house in order is critical to creating the confidence that people need to start investing and growing in Connecticut again.
He added that Connecticut’s fiscal issues were “difficult but solvable challenges,” calling on state lawmakers to take a long-term view and focus on structural reforms.
With only about three weeks left to the 2016 legislative session–and the state facing much steeper deficits in the next fiscal years–the administration and lawmakers will have to find common ground to close the budget gap.
That will be a challenge. Democratic legislative leaders expressed concerns over aspects of the governor’s new budget and warned that they could cause local taxes to rise.
While Republicans expressed appreciation that the governor recognized the budget situation, they continued to advocate for long-term budgetary and policy changes including requiring legislative approval of labor contracts and a cap on bonding.
For more information about state spending, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco
For more information about state taxes, contact CBIA’s Bonnie Stewart (860.944.8788) | @CBIAbonnie
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