Gov. announces spending reductions amid Wall Street fears - WFSB 3 Connecticut

Gov. announces spending reductions amid Wall Street fears

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HARTFORD, CT (WFSB) -

Due partly because of stock market concerns, state officials released a list on Friday of more than $102 million in budget rescissions.

The Office of Policy and Management said Gov. Dannel Malloy took the steps to ensure the budget stays balanced.

The rescissions will affect Executive Branch agencies and the Judicial Branch.

The Executive Branch cuts total $99.2 million. Legislative leaders and the Judicial Branch have been asked to reduce spending by $420,000 and $3.1 million respectfully.

In addition, the OPM said it identified nearly $15 million in municipal aid reductions. Overall, however, it said municipal aid will continue to see an increase of 11.4 percent for the fiscal year 2016 budget over the fiscal year 2011 budget.

Rescissions will also affect the Connecticut State University System’s board of regents, Department of Agriculture, Department of Children and Families and others.

A complete list of the agencies and departments affected by the reductions can be found here.

The OPM said that it’s all due to the volatility on Wall Street and uncertainty about the future.

“OPM’s estimate of capital gains has decreased for the current fiscal year, and it would be reckless to expect these revenues to grow when the S&P 500 is down more than 6 percent since May,” said Ben Barnes, OPM secretary. “Only once since 1994 have we seen positive capital gains revenue growth when the market was down.”

Barnes said that five times in the last 20 years a down market has led to significant revenue drops. That’s why he said they’re taking precautionary steps.

“While not everyone will be pleased with these decisions, this is the right thing to do to keep our state budget balanced,” he said.

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