Governor: ‘We Have to Fix How We Budget’

Issues & Policies

Governor Dannel Malloy gave lawmakers a stark analysis of Connecticut’s challenges today, proposing budget revisions he said reflected the state’s “new economic reality.”
With a series of future budget deficits looming, the Governor proposed cutting $569 million in spending for the next fiscal year–with no tax increases–eliminating thousands of jobs, reforming state employee pensions and benefits, and prioritizing government programs.


Governor Malloy: “We can’t wish away our problems.”

Saying “we can’t wish away our problems,” the Governor called for new, innovative approaches to the state’s challenges.
“State government must reset our expectations of what we can afford, how we provide services, and how we save for our priorities,” he told legislators in his State of the State address.
“It is absolutely necessary if we want to create a more sustainable and enduring economy.
“We need to reshape the way Connecticut budgets. We need to make our budget more predictable, more sustainable, and more transparent.”
‘Tough, necessary changes’
CBIA president and CEO Joe Brennan called the Governor’s proposals “tough, necessary changes Connecticut needs to resolve its fiscal issues and build a strong, competitive economy.”
“We no longer have a choice,” Brennan said. “This is what the state’s fiscal condition demands.
“The Governor’s responding to what he’s hearing from residents and large and small businesses, that government must change the way it operates if Connecticut’s going to see strong, vibrant economic growth.
“And the uncertainty created by the state’s short and long-term fiscal problems is what threatens that growth.
Reforming the budget process will drive business confidence, investment, and job creation.”
Budget principles
The Governor outlined five principles, noting that for the state to build on recent progress, “we have to fix how we budget.”
His first principle limits government spending to available resources, or ending what Malloy called “putting spending increases on autopilot.”
Governor Dannel Malloy

This budget is based not on how much we want to spend, but how much money we actually have to spend.

"Similar to a zero-based budgeting approach, my budget limits spending in the upcoming fiscal year and beyond to actual revenue projections," Malloy said.
"In other words, this budget is based not on how much we want to spend, but how much money we actually have to spend.
"This new method will require different decisions to keep government living within its means. It won’t come without sacrifice–it will require the reduction of the state workforce by more than a thousand employees through attrition and other means."
Malloy also said he supported an enforceable spending cap to keep spending in check.
State employee pensions, benefits
The Governor's second principle addressed the primary driver of Connecticut's long-term unfunded obligations, unsustainable state employee pension and retirement costs.
"We still face a fiscal cliff in 2032 that will be impossible to meet," he said. "The instability created by this cliff is shaking the confidence of the business community and looming over the next generation of Connecticut taxpayers.
"The obligation of maintaining this system cannot be solely supported by our taxpayers under our current budget practices. If we want to support our pension and benefits system, we have to make changes."
In tackling long-term pension obligations, Malloy said his expectations for negotiations with state employee unions "should be based on what we can afford, not what we previously spent."
Malloy's third principle would set priorities for funding government programs and services, with the Governor saying "every existing line item cannot be considered a core service to be funded in perpetuity."
"We have to reform our earmark process," he said.
"Any state funding that falls outside our core government services must be based on merit and merit alone."
Malloy's next principle holds state agencies accountable, with commissioners asked to focus on performance, outcomes, and cost effectiveness.
"State agencies must be held accountable to the public and the legislature for their results," he said.
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CBIA's Joe Brennan called the budget proposals "tough, necessary changes Connecticut needs to resolve its fiscal issues."

"At the same time we’re making agency budgets more transparent, we also need to push commissioners to find more cost-effective ways of accomplishing their respective missions."
His proposal also would give agency heads greater greater budgeting authority.
Finally, the Governor called for bipartisanship in the budget process, saying that no party had a monopoly on good ideas.
"During this session, we can either be part of the solution or stand on the sidelines throwing stones," he said. "We cannot do both."
'Turning point'
Brennan said the Governor’s five budget principles “reflect the sentiment we are hearing from our member companies.”
“This is a critical turning point for Connecticut,” he said.
“While we have made progress creating jobs and attracting businesses, that growth is not strong enough to sustain and support state programs and services and keep jobs and families in Connecticut.
“Lawmakers must come together and support real, long-term reforms so Connecticut can meet the competitive demands of a 21st century economy.”


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