Malloy holds back state funds to cities and towns - WFSB 3 Connecticut

Malloy holds back state funds to cities and towns

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(WFSB file photo) (WFSB file photo)

Gov. Dannel P. Malloy is holding back funds to state agencies and municipalities to cover an estimated $881.6 million gap built into the newly passed, two-year $41.3 billion budget.

The Democrat's fiscal office announced Friday that the bulk of the $881.6 million - $700 million - will come from expected savings from the state employee labor concession agreement.

“Senator Fasano may need to re-take ‘Lawmaking 101.’  If the Senator wanted to direct where these savings should come from, he could have passed statutory language with those details.  He didn’t do that.  Rather, he took the much easier – and much more politically safe – route of accounting for the savings, but leaving it to the Governor to allocate them," Malloy’s Director of Communications Kelly Donnelly said in a statement on Friday. “As always, Governor Malloy is willing to do the hard work Senator Fasano can’t – or won’t – do.  If the Senator feels strongly about where these savings should be found, he should have made the reductions in the budget.  In fact, he can still work with his colleagues to amend the budget-making specific cuts or perhaps raise taxes to avoid making these tough decisions.  Until then, he’s just trying to have his cake and eat it too.”

But Malloy's plan reduces state aid to cities and towns by $91 million, a move Democratic House Speaker Joe Aresimowicz  is calling "misguided." He says school funding "is a clear legislative priority" of the new, bipartisan state budget.

"I understand the Governor has the responsibility to manage the budget to keep it in balance, but his decision to again put a quick target on our towns and public schools is misguided. Frankly, a significant part of the current estimated shortfall is based on lower federal funding, which his own budget office failed to project. Funding our schools is a clear legislative priority in the bipartisan budget just passed, so going after that particular funding raises serious questions and will no doubt bring strong pushback from all corners of the state," Aresimowicz said in a statement on Friday.

However, an additional $8.5 million must also be counted because of the delays in adopting the budget. That money will have to come from somewhere.

Malloy's budget secretary Ben Barnes says "adjustments" are needed now to achieve savings and these cuts let municipalities and agencies know how much funding to expect for the rest of the fiscal year.

“Although we've only had a budget for 17 days, the fact is we're already more than four months into the fiscal year, which means these adjustments need to be made now in order to achieve the necessary savings," said OPM secretary Ben Barnes. "State agencies and outside groups alike need to know what resources are available from the state budget for the remainder of the fiscal year. In addition, Monday's consensus revenue forecast suggested that the Governor may need to exercise his statutory rescission authority or the general assembly may need to take further actions to balance the budget in the months ahead."

Barnes said the holdbacks represent difficult decisions that the state government must make.

"But they're also necessary in order to give taxpayers, businesses, and bondholders the stability they need and deserve," he said.

The holdbacks affect the following:

  • Reductions to state employee salaries and wages: $422 million
  • Reductions to state employee fringe benefit costs: $277 million
  • Reductions to state operational costs: $25 million
  • Reductions to municipal aid: $91 million
  • Reductions to program costs: $55 million

House Republican Leader Themis Klarides on budgetary holdbacks said Malloy's "brazen decision to ignore the intent of the compromise budget is bare sabotage."

"The clearest indication yet that he’ll spend his remaining time in office working to punish anyone who has opposed his failed policies. He has no interest in reforming state government, rehabilitating our economy, or even considering the concerns of local leaders and the citizens legislators serve—the very people who appreciated our efforts to work together to avert his cruel cuts to schools and critical social services programs. Plain and simple, his sole focus is to break the budget and the lawmakers who supported it," Klarides said in a statement on Friday.

Connecticut Conference of Municipalities said municipal leaders believed they were able to move forward with their own budgets after the state passed its budget last month

"But now, new additional cuts approaching $100 million must be absorbed – through service reductions or local tax hikes – nearly halfway through the fiscal year. Municipal governments will have increasing difficulty trying to managing their current year spending, having to again just for a shortfall in revenues less than a month after being told to count on a defined level of state aid," Connecticut Conference of Municipalities said in a statement on Friday.

Connecticut Conference of Municipalities said they released "a report prior to the last session to try and stabilize government finances and avoid this reoccurring volatility." 

"Unfortunately, the General Assembly failed to enact many of those necessary reforms.  CCM will continue to promote a reform agenda that can stabilize Connecticut’s finances and put the state back onto a path for growth. In light of these recent developments, we can only hope that legislative leaders will be more willing to work with CCM and its member municipal leaders going forward," Connecticut Conference of Municipalities said. 

Senate Republican President Pro Tempore Len Fasano (R-North Haven) said the governor was "completely ignoring the legislative intent of the state budget lawmakers passed last month."

"Instead of adopting the targeted savings identified by the legislature, including specified cuts to overtime and consolidation of government administrative functions, the governor continues to work towards his goal of inflicting deep cuts to municipalities and social services that legislators are committed to protecting. He is also wrongly cutting from education grants, even after his administration made an affirmative representation that his office would not target education grants to support the renters rebate program. Unfortunately, I took the administration for their word, which will never happen again. In true form, the governor is blatantly ignoring the will of the legislature, and doing what he wanted to do all along. He is going out of his way to dismiss certain savings and instead dramatically reduce funding to municipalities, turning a blind eye to the careful efforts of lawmakers to protect towns and cities as much as possible. I know Connecticut’s legislative leaders won’t stand for this. I’m sure fellow leaders will want to work together to make the legislative intent of our budget even clearer to Gov. Malloy with action to stand up for our towns, cities and core services," Fasano said in a statement on Friday.

A list of applied holdbacks along with the reasoning behind them can be found here.

Copyright 2016 WFSB (Meredith Corporation). The Associated Press contributed to this report. All rights reserved.