Gov. Dannel Malloy unveiled his biennial budget proposal for fiscal years 2014 and 2015 in a speech to the Connecticut General Assembly Wednesday afternoon.
The governor’s proposal, which must address a projected $1.2 billion deficit for the fiscal year beginning July 1, aims to spend $43.8 billion over the next two years, a 5 percent increase over the state’s current level of spending. The budget plan contains no major tax increases and recommends significant cuts to the state’s hospitals and social services while selling $750 million in state bonds.
“[This budget] furthers a plan we started two years ago,” Malloy said in his remarks to the Legislature. “A plan to get our finances in order, to live within our means and to do it while making bold investments to create jobs and grow our economy.”
Among the cuts that Malloy included in his plan were over $200 million in spending reductions drafted during a special legislative session in December and designed to address a shortfall of over $450 million for the current fiscal year. The December cuts slash $103 million from the state’s hospital system that was intended to pay for uninsured patients, and Malloy’s proposal would maintain it for the coming fiscal year and increase the cut to $146 million by the 2014–’15 fiscal year.
Senate Majority Leader Martin Looney declined to comment on the parts of the budget Malloy chose to cut, emphasizing that the proposal will be substantially shaped by the Legislature before it is ultimately passed. Still, he added that some cuts cannot be avoided.
“It is inevitable that this process will involve some painful cuts, because to do this without any substantial infusion of new revenue, it is going to be painful,” he said.
Many line items in Malloy’s proposal saw spending increases for the next biennial budget. Chief among them is the state’s Medicaid spending, which the governor’s office estimates will cost an additional $384 million in the fiscal year starting in July. Additionally, the governor has proposed to funnel $119 million into education above current spending levels.
Though the proposed budget does not raise income taxes — as Malloy repeatedly promised not to do throughout the past year — it does preserve some taxes intended to be temporary, such as a tax on power plants and a surcharge on the corporation levy, which were both due to expire on July 1. Malloy’s budget plan would also reduce the state’s new earned income tax credit, from 30 percent to 25 percent retroactive to Jan. 1, which would bring the state $18 million in additional funds.
Beyond these revenue increases, Malloy has proposed selling $750 million worth of state bonds to maintain a balanced budget — a move Pat O’Neil, press secretary to House Minority Leader Lawrence Cafero, called “dishonest.”
“Any household that, at the end of the month, realizes that ‘we don’t have enough money for groceries, so we’re going to put some debt on our credit card’ — that’s what [the governor is] doing,” he said. “The idea that this is a balanced budget is absurd. It’s only balanced because he borrowed an enormous amount of money.”
Cafero and Senate Minority Leader John McKinney, who are both mulling gubernatorial runs in 2014, could not be reached for comment.
Gary Rose, chair of the Government and Politics Department at Sacred Heart University, said that in his last budget, Malloy angered many in the state by pushing through an income tax increase. By contrast, this time Malloy produced a budget that is much more balanced — a turn of events he called “very surprising.”
“As a political scientist, I start to wonder what the political motivation is, and my thoughts go to 2014,” he said. “He’s not coming off as an out-of-control tax-and-spend Democrat, and that’s pretty savvy.”
The budget will now be taken up by the Senate and House appropriations committees.