Governor Releases New Plan to Close Budget Deficit

Issues & Policies

Governor Dannel Malloy today moved to balance the state’s 2017 budget, proposing hundreds of millions of dollars in spending cuts.
The Governor acted just days after the state legislature’s Appropriations and Finance committees 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.


While the General Assembly last month closed a $220 million gap for 2016, a $933 million budget deficit is forecast for next fiscal year.

“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 plan.
“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.”
Malloy’s proposal does not include tax hikes.
It drops a $220 million plan for sharing sales tax revenues with municipalities that the General Assembly approved last year; cuts funding for education and hospitals; reduces Medicare rates; and increases the contribution certain non-union state employees and political appointees make toward their health benefits from 12% to 20%.
It also eliminates an estimated 2,500 state jobs through layoffs, vacancies, and retirements. The state began laying off employees yesterday, with more notices sent today.
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.”
“I don’t think there is any other choice,” Brennan said. “We have this perception out there that we just are constantly raising taxes and running deficits and we’ve got to get that behind us.
“We’ve got to show we can close gaps without tax increases and start getting our fiscal house in order and that will create the confidence that people need to start investing and growing in Connecticut again.
“The sooner we get these issues behind us, the sooner our economy can start growing again.
“We can send a message that we have changed the way we’re doing business in Connecticut and I think that is really, really critical.”
Brennan 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.
The debate over the budget is playing out amid the release of a detailed report to the state’s Commission on Economic Competitiveness.
The Connecticut Economic Competitiveness Diagnostic report outlined a series of growing challenges to the state economy’s ability to compete regionally, nationally, and globally.
CBIA president and CEO Joe Brennan

We can send a message that we have changed the way we're doing business in Connecticut.

"Connecticut’s GDP has not yet recovered from the recession and newly released employment data indicates we have not returned to pre-recession employment levels," the report said.
"In addition, Connecticut’s economy is not growing at the rate of its peers or the nation as a whole."
The report noted the state's strengths, including high rankings for GDP per capita, productivity, and household income, while warning that other states were closing the gap.
Four factors were driving Connecticut's poor business climate rankings according to the report: fiscal fundamentals, negative national publicity, unpredictable governance, and lack of engagement.
While the report did not feature any recommendations, it did offer themes for the commission to explore, including addressing the state's pension and budget challenges to restore business confidence.


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