With this year’s state budget apparently heading for a deficit of about $284.6 million, the legislature approved a $20.5 billion stop-gap proposal  that, among other things, includes new funding for Governor Malloy’s education reforms.

The House approved the bill 95-49 and the Senate approved the proposal by a 22-13 vote.

The legislation increases spending by $143 million over the approved budget, a 2% increase that stays under the state spending cap by a slim $86.4 million.

Among other things, the legislation:

  • Diverts $222 million from an account set aside to pay down state borrowing to cover a deficit in 2009.
  • Cuts $50 million by tightening eligibility and limiting nursing home coverage in a certain Medicaid program
  • Increases commuter rail fares by 4%
  • Moves $70 million from the transportation fund into the General Fund

In response, House Republicans offered an amendment that included ending the earned income tax credit, freezing longevity payments for unionized state employees, cutting funding for the Citizens’ Election Program, and moving funding away from the New Britain-to-Hartford busway. It also set aside $50 million for the state’s conversion to GAAP accounting; the Democrats’ legislation postpones that funding. The amendment failed, however.

According to consensus revenue figures from the Office of Policy and Management and the nonpartisan Office of Fiscal Analysis, revenues have dipped by $112.8 million, and spending has increased by $47.4 million.

OPM Secretary Benjamin Barnes vowed, however, that the administration was "committed to balancing the budget."

The budget difficulty underscores the urgent need to continue to find cost savings in state government. Controlling state spending and improving efficiency in many aspects of government will help maintain vital public services in a sustainable way and avoid additional tax increases that hurt our economy.

For more information, contact CBIA’s Pete Gioia at 860.244.1945 or pete.gioia@cbia.com.