Governor unveils budget plan to fix financial troubles - WFSB 3 Connecticut

Governor unveils budget plan to fix financial troubles

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Gov. Dannel Malloy unveiled his state budget proposal on Wednesday. (WFSB photo) Gov. Dannel Malloy unveiled his state budget proposal on Wednesday. (WFSB photo)
HARTFORD, CT (WFSB) -

Gov. Dannel Malloy unveiled his two-year state budget proposal on Wednesday at a time when Connecticut is confronted with a mountain of financial troubles.

The two-year $20 billion annual budget was presented before a joint session of the General Assembly on Wednesday. The governor's budget relies heavily on getting more from cities and towns  as well as huge labor concessions.  

The plan for the next fiscal year includes $200 million in new taxes, takes $700 million in labor costs savings from state employees and calls for cities and towns to pay more for teacher pensions.

"We can build on our record of fiscal responsibility. To do it, my plan contains $1.36 billion in new spending reductions," Malloy said. 

Under the plan, Malloy called for $1.5 billion in state employee givebacks over two years.

The state is expected to face a $1.7 billion shortfall for the fiscal year starting in July. Its main spending account is about $18 billion per year. Malloy's move comes fresh off late cuts late last year.

In last years budget, the governor used layoffs to balance  the budget. The 1,200 notices went out to state workers. This time with  budget problems larger, Malloy said he's looking at bigger numbers and  possibly more than 4,000 layoffs.

"It is huge. It's huge and and after saying 700 million to they could be layoffs," CT AFL CIO Lori Pelletier said. "And then say lets give them a round of applause, clearer truth is stranger than fiction."  

"what scares me are 42-hundred layoffs. Those are people that are really crucial to our economy," House Speaker Joe Aresimowicz said. "If we were talking about a private employer with that many layoffs we would be doing backflips to fix it."

For the first time, Malloy was asking them to help fund teachers' pensions and paying a third of the cost. Roughly $400 million that had been covered by the state would be shifted to wealthy cities and towns under the governor's two-year proposal to cover pensions.

"This is dramatic for a town our size and town we feel we are doing good because that's what we are supposed to be doing but i have never seen anyone get punished for doing good so," Wolcott Mayor Thomas Dunn said. 

Towns such as Wolcott may be the losers,  a possible loss of $5 million. 

"My budget leaves 75 million in year one and 85 million the following year in local aid unallocated," Malloy said. 

But, it's money that won't be there that will hurt some cities and towns.

"When he says we are going to be in this together, it means you are going to pay my bills," Minority Leader Themis Klarides said. 

Malloy called on the elimination of $200 million in property tax relief for income tax returns.

Hartford would also benefit with something else the governor is proposing a way for cities and towns to tax hospitals.

Republican leaders have pushed their own plan that would take money out of several state agencies and the UConn Health Center instead of cutting from cities and towns.

"Transferring one obligation to another is a shell game because whether you take it out of my right pocket  or my left pocket - you are taking it out of my hide," Senate Republican Leader Len Fasano said. 

In addition to pensions, the governor's budget changes how much money cities and towns get to offset education costs.  

"Real reform must begin with our educational cost sharing formula," Malloy said. 

The governor wants wealthier towns with more resources to get less money and to stop reimbursing communities for students they no longer have. Cities such as Hartford would benefit.

"This goes a significant position towards putting us on a fiscally sustainable footing and the governor made a good point of what that matter to the state," Hartford Mayor Luke Bronin said. "It's not just a question of fairness, but economic competitiveness."

Hartford has a larger number of tax exempt properties. 

"On net, it represents a significant increase in revenue to the city of Hartford and one I think will allow us to move towards a strong fiscal footing," Bronin said.

The Connecticut Hospital Association said previous taxes have resulted in big cuts. 

"The hospital tax has increased costs for patients and caused the loss of thousands of healthcare jobs," Connecticut Hospital Association said in a statement on Wednesday. 

An analyst for the governor's budget proposal said the plan is not a serious one and added any surplus should be put into a rainy day fund.

There is also a hefty increase in spending on the XL Center in Hartford to the tune of $250 million in renovations.

To read the full 2018-2019 Biennial Budget for Connecticut, click here

To read all of Gov. Malloy's speech, click here.

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