Budget chief: Deep Conn. budget cuts expected

Malloy budget chief warns deep Conn. budget cuts expected; policy changes needed

Associated Press

HARTFORD, Conn. (AP) -- The slow pace of Connecticut's recovery from the recession is taking a toll on state revenues, leading to expected deep spending cuts next fiscal year, according to Gov. Dannel P. Malloy's budget director.

Ben Barnes, secretary of the Office of Policy and Management, told members of the General Assembly's two budget committees on Tuesday that not only is the current $20 billion fiscal year budget about $365 million in deficit, but the new fiscal year beginning July 1, 2013, is nearly $1.2 billion in deficit and the following three years are each about $1 billion in the red, unless "policy changes" are made.

"We must adjust our policies that underlie our current services spending and reduce that so we can live within our means," Barnes said.

Barnes did not provide any details of the deficit-cutting plan for the current fiscal year or the new, two-year-budget Malloy, a Democrat, will unveil in February. However, he said his boss will not propose tax increases, is committed to "hard spending cuts" and wants to continue making investments that create jobs and improve education.

State Sen. Toni Harp, D-New Haven, co-chairman of the General Assembly's Appropriations Committee, acknowledged it's going to be tough to make the cuts necessary to balance the new two-year budget and future budgets. But she said some including "sizeable changes" in the deficit-cutting plan for the current fiscal year could help offset some of that pain.

"We're going to have to take a look at, unfortunately, Medicaid. It's the biggest area in the budget," she said. "We're going to have to figure out if there are some things we can do, if we can spend in a smarter way than we have previously to sort of cut the growth in that program."

After making adjustments to Medicaid, Harp jokingly predicted the budget will ultimately be balanced by "a death by a million cuts."

Barnes suggested at Tuesday's hearing, however, that Connecticut might not ultimately be granted permission by the federal government to impose a new asset test for certain adult Medicaid recipients, a move that was seen as a way to help cut costs. He said federal authorities are concerned the proposed financial asset reporting requirement will "inadvertently deter eligible people from applying."

Harp said she and other Democrats want to support Malloy in his call for no new taxes. But she the legislature should take a look at the tax breaks that have been awarded over the years to make sure they make financial sense.

"We should look at whether they're actually paying off," she said. "If we haven't had job growth, if our economy is stagnant and we're giving away these tax credits, they're not doing what we thought they would do."

There appeared to be skepticism among some minority Republicans about whether Malloy will stick to his no-tax increase goal. Malloy and the majority Democrats in 2011 signed off on $2.6 billion in tax increases over two years to help cover that deficit.

State Sen. Robert Kane, R-Watertown, ranking Senate Republican on the Appropriations Committee, asked Barnes if he and the governor were going on record with Tuesday's presentation and committing to no tax increases.

Barnes said he would not speak for Malloy in terms of parsing his statements on taxes.

"I have no intention, I will not, I shall not, I do not wish to — I feel like I'm in 'Green Eggs and Ham,'" said Barnes, referring to the famous Dr. Seuss book. "We do not like new taxes. "

But Barnes warned Kane there are things he and Malloy can't control, such as spending cuts imposed by Washington.

"Circumstances can and often do change," he said. "I'm not going to make an absolute promise. Right now, I think that our intention not to raise taxes is abundantly clear. I believe until we submit a budget and adopt a budget that does not include taxes, I will not satisfy you."

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