Republican General Assembly leaders charge that Governor Dannel Malloy’s budget deliberately underfunds state employee health care accounts to create a rosier fiscal outlook.
The accusations made yesterday by Senate minority leader and gubernatorial candidate John McKinney and House Republican leader Larry Cafero follow last week’s report on Malloy’s budget proposal by the Office of Fiscal Analysis (OFA), Connecticut’s nonpartisan fiscal research office. The OFA projects that mandatory appropriations for state retiree health care accounts will cost $51.6 million more than Malloy provides for in the budget. Combined with other spending obligations and Malloy’s proposed expenditures, paying for the shortfall would create a $59.1 million deficit, and surpass the constitutional spending cap by about $60 million, according to the OFA report. Malloy countered that state programs could function under the budget he proposed.
“If our budget was passed today in its present form, that’s the budget we’re going to live within,” Malloy said at a press conference.
McKinney said the OFA findings disproved Malloy’s claims that the budget he proposed was “balanced.” According to the press release, State Comptroller Kevin Lembo contacted the governor in October 2013 to ask for additional appropriations to cover the cost of an influx of retirees from the Department of Corrections.
A press release from Connecticut General Assembly Republicans today stated that the governor’s budget estimates fewer than 300 retirements in the Department of Corrections when more than 800 employees are eligible to retire. They contend that Malloy “ignored” Lembo’s request. Lembo did not respond to requests for comment.
The Appropriations Committee is now in the process of reviewing Malloy’s budget and must propose its own budget by April 3. Committee chair state Senator Beth Bye said in a statement that the committee will address the “anticipated shortfall” in its proposal.
Alan Calandro, director of the OFA, said the discrepancy between his organization’s numbers and the governor’s budget did not necessarily mean Malloy’s budget was imbalanced. He added that it is not uncommon for governors to allocate less spending than requested by state agencies, even to cover mandatory expenditures such as pensions or health care costs. At the end of the year, Calandro said, surpluses from over-funded departments can be used to cover potential shortfalls in under-funded areas.
Malloy’s budget included sufficient funding to cover retiree health care costs, according to Ben Barnes, secretary of the Office of Policy and Management — the governor’s agency responsible for budgeting. According to the OPM’s calculations, increases in health care and administrative efficiency will enable the state to pay for additional beneficiaries without increasing appropriations to the degree the OFA projects as necessary.
Additionally, Barnes said, making fully accurate predictions about the health care needs of state retirees is difficult because conditions change every year. In previous years, the state has overestimated the amount of spending required. Barnes suggested that Republicans’ criticism of Malloy’s budget was politically motivated.
“Republicans would love to find fault with his management of the budget but they are left finding small discrepancies in technical reports from OFA and holding those out as some kind of smoking gun,” Barnes said.
Republican candidate and Danbury mayor Mark Lauretti said the OFA report showed Malloy is fiscally irresponsible. Lauretti said he believes fiscal issues will play a major role in the gubernatorial election.
Gary Rose, chair of the department of Politics & Government at Sacred Heart University, said the OFA’s findings are significant and need to be addressed in the final budget proposal, but the Republican response should be considered through the lens of the upcoming vote. Rose said McKinney, who was in last place among Republican candidates in the most recent Quinnipiac University poll, might be looking to gain traction by drawing voters’ attention to the budget and presenting himself as a fiscal watchdog.
“I think [McKinney’s] campaign just simply doesn’t seem to be going anywhere right now and [gubernatorial candidate Tom Foley] is somewhat of a juggernaut in the Republican party,” Rose said. “McKinney is going to ride this as much as he can. He needs all the traction he can get because his campaign is floundering.””
The constitutional spending cap for fiscal year 2015 is just over $18 billion.