Gov. Dannel Malloy released his second budget to address the state's growing deficit as more than 100 state employees received layoff notices.
On Monday, Malloy said the updated the fiscal year 2018-2019 biennial budget proposal made changes to his plan, which was originally released in February, to cover a larger-than-projected budget deficit. The deficit is forecast to be $2.3 billion.
Meanwhile, layoff notifications began going out last Friday and hundreds more could go out if unions don't agree to concessions.
Union officials say they are preparing for more layoffs, telling their members 1,100 notices could go out. There were 113 state layoff notices sent out on Monday. The following departments were impacted: Department of Energy and Environmental Protection 22 Department of Social Services 88 Office of Policy Managment The governor is cutting another $600 million in spending in this budget. It includes more cuts to cities and towns.
"People have to manage their budgets," Malloy said. "I can't manage them. They have to manage them."
When asked if local governments can manage without raising property taxes, Malloy said yes, but that's not the reaction from the Connecticut Council of Small Towns.
“Unfortunately, this will impose an additional $400 million per year on already overburdened property taxpayers,” Betsy Gara from the Connecticut Council of Small Towns said in a statement on Monday.
Malloy's second budget takes $15 million from transportation projects, cuts an additional $350 million in municipal aid. It also puts sales tax on nonprescription drugs
Malloy and the GOP have been pushing hard for labor concessions without an agreement there could be more layoffs and cuts.
"I hope we are finding stability,” Malloy said. “I am certainly trying to lead us to that stability, but we need to find it in the coming days both with respect with our agreements to labor and finding a budget."
The proposal cuts general fund expenditures an additional $241 million and other funds by $363 million in Fiscal Year 2018. The reductions would decrease general fund expenditures over the 2017's appropriation.
The governor's office said, "the administration will ensure that it enters budget negotiations with legislative leaders with a working, balanced budget proposal."
“The state must live within its means. We cannot spend more than we take in. That’s why, when revenue came in lower than expected in April, we went back to the table to redraft our budget proposal. This session, the best outcome we can achieve for the people of the state is to adopt a responsible, balanced budget that does not rely heavily on new or increased taxes," Malloy said in a statement on Monday.
The proposal has the following provisions, according to the governor's office: Adds English Learners as a separate weighting factor in the school funding formula. Municipal share of TRB contributions is capped at $400 million until such time that normal costs begin to exceed $400 million. Implements ideas from the Republican proposal, such as the transfer of sales tax on motor vehicles to the Special Transportation Fund and a requirement that the Lottery Corporation reduce spending in order to provide more to the general fund. Maintains our commitment to fully funding the state’s pension obligations. Finishes paying off the state’s Economic Recovery Notes by the end of FY 2018. Puts the General Fund nearly $30 million in surplus. To maintain the large categories of municipal aid, smaller grant programs are eliminated. Maintains the Governor’s commitment to increasing aid to urban areas that are facing grave fiscal challenges and increases oversight on how those dollars are spent. The bulk of the revenue changes come from three areas: curtailing the transfers to the MRSF and Pequot and Mohegan Fund; increasing the real estate conveyance tax on properties valued above $800,000; and elimination of the sales tax exemption for non-prescription drugs. Continues to call for $700 million in savings in FY 2018 through a new agreement with SEBAC, or by other means if necessary. Makes some changes to the fringe benefit accounts based on actual experience in FY 2017 as the state experienced a large reduction in the state workforce in the past year.Democratic and Republican leaders are also drafting fresh proposals and preparing for another round of budget talks in the coming days. Lawmakers on both sides are also scrambling to put together budgets. All of this is being done due to income tax revenues, which are sharply declining.
President of the Connecticut AFL-CIO Lori J. Pelletier said Malloy “has doubled down on an austerity budget plan that deepens cuts to programs for the state’s most vulnerable, reduces transparency by eliminating the State Contracting Standards Board and potentially risks public safety with the elimination of funding for fire training schools and deferring a new class of state troopers.”
“On top of this, the state is laying off frontline public service workers despite the workforce already being cut to the bone,” Pelletier said in a statement on Monday. “Unbelievably, one of the few revenues the Governor is considering is an elimination of the property tax credit that primarily benefits the state’s middle class. At the same time, he ignores the over $7 billion in tax expenditures – many subsidizing big businesses – that are in desperate need of review.”
Pelletier said the budget "should be based on investments in fundamentals that make Connecticut’s economy grow" such as "investing in workforce development, infrastructure, and raising the wage floor for all working people.”
To see the governor's recommended budget for the fiscal year 2018 to the fiscal year 2019, click here.
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