Balancing budget, meeting needs of poor will tax Malloy

Editor's note: This is the second article in an occasional series about the challenges facing the new governor when he takes office on Jan. 5.

Since the early going of his successful campaign for governor, Dan Malloy has pledged to tackle the unprecedented budget deficits that await Connecticut over the next three fiscal years. But he usually adds a caveat.

"We're going to balance our budget," he said in a debate with Republican Tom Foley in October, "and we're not going to further endanger or take apart our safety net."

For the people, nonprofits and service agencies that make up that safety net, those are encouraging words in worrying times.

Connecticut faces projected deficits of roughly $3.5 billion in fiscal 2012 and 2013, and while the Malloy team will almost certainly raise some taxes to close the gap, there is determination among members of the new administration, and the legislature, to curtail the amount of money the government spends.

What that determination will mean for the groups that help provide services to the poor, elderly and vulnerable is an open question, one that will begin to be resolved when Malloy takes over for outgoing Gov. M. Jodi Rell on Jan. 5.

The Malloy administration is preparing for a "tremendous challenge," said Benjamin Barnes, a former aide to Malloy during the latter's 14 years as mayor of Stamford. Barnes will serve as the secretary of the Office of Policy & Management, the governor's budget chief.

The incoming administration is determined not to gut essential services, Barnes said, while noting that there are "going to be programs that others will think are part of the safety net, and some people will disagree."

The administration's stance, and the sheer size of the budget deficit, will mean that nonprofits "will be challenged" over the coming years, Barnes said.

The budget chief also gave an example of cuts that the administration would consider inappropriate, and counterproductive.

"I don't wish to make eligibility changes to Medicaid or any of the HUSKY programs that would result in people being uninsured who don't have means to get coverage themselves," Barnes said.

He will do "everything in my power to avoid" cuts that force people out of needed programs or into deeper straits, Barnes said, though he also noted the administration's willingness to tinker with some aspects of entitlement programs such as Medicaid, if relatively painless savings can be found. He cited previous attempts to cut the cost of transporting Medicaid recipients to doctors' appointments as an example of such a change.

And the administration will not likely have money to redress the perceived wrongs of past years, such as by raising reimbursement rates for doctors and clinics who feel that skimping has deterred providers from participating in programs for the needy.

"We've got to keep our private providers successful and in business," Barnes said. "Those who may have had hopes that the new administration will mean immediate rate increases are probably not going to be happy with what we come out with."

Neither will it be simple for the Malloy administration to make serious cuts to close the deficit - in addition to anticipated tax increases - without confronting the cost of Medicaid, the program for low-income adults and children whose cost is shared by the federal government and the states.

In its most recent Fiscal Accountability Report to the legislature, the Office of Policy and Management projects that the cost of Medicaid and the State Administered General Assistance program will total $4.7 billion in fiscal 2012, if current services are maintained. That amount would be 23.7 percent of the total state budget for that year.

In the trenches

Nonprofits will be unable to avoid budget cuts and quests for efficiency of their own, said Deborah Monahan, the executive director of the Thames Valley Council for Community Action Inc., which offers a wide range of services to the poor, elderly and unemployed.

TVCCA has furloughed workers and reduced hours over the past several years, as demand for help has crested with the recession and cash has grown short among supporting institutions, including the state and federal governments and third-party foundations.

"We're looking at what we do, how we do it and making sure that we're maximizing those dollars," Monahan said. "If we're putting in much more than the clients are getting out of it, we're going to look at whether we should be doing that program."

But people who have been able to scrape by during previous rough patches are increasingly desperate, she said, describing the phone call she received on Wednesday from a mother seeking help from an energy assistance program to help keep her heat on.

"She said, 'Ma'am, I have nothing,'" Monahan said. "'I have nothing.' That's what we're talking about."

Bleak but hopeful

The first adjective used by Ron Cretaro, the executive director of the Connecticut Association of Nonprofits, was "bleak."

But immediately, he moderated, noting that Malloy has pledged to find ways to streamline state government without doing extensive damage to the needy and the web of programs, agencies and charities that serve them.

"The new governor-elect has said he's not going to shred the safety net," Cretaro said. "We're encouraged by that, but at the same time, we don't know how 'the safety net' is going to be defined, or redefined.

"We want to trust that he's going to protect some of the core, essential services that people need," Cretaro added. But "we don't know whether housing, and arts and culture, and others ... are going to be similarly protected, or not."

Leaders of local relief agencies expressed similar confidence about Malloy's invocation of the safety net, but also said they are preparing for a tough debate with those who will seek to close the deficit with major service cuts.

It will fall to advocates for the needy and other recipients of aid to enlighten lawmakers about "the real and true needs that we're seeing on the front lines," Monahan said.

"People are struggling with basic needs," Monahan said. "Heating. Housing. Food. We're talking about the basic needs that individuals and families have to just get through the day. And I think those are the things that we have to have real honest conversations about."

For Monahan and other agency leaders, the upshot of this uncertainty is the need to "wait and see."

Malloy "appears to be someone who's willing to roll up his sleeves and have those conversations and have those discussions" about the services the state can give up, and those it can't, Monahan said.

Many of those spending decisions are important, she noted, even for an agency like TVCCA, which funds the majority of its programs with federal grants. Those grants are often passed through states, which means officials in Hartford could decide to redirect funds elsewhere, likely spelling the end of a variety of the programs TVCCA runs in eastern Connecticut. Those programs include a more than $2 million senior citizen nutrition program, more than $3 million for Head Start and more than $1.5 million for the agency's Little Learners program.

For those and other similarly expensive programs, the government is the first and only option, Monahan said: No other group could support them if the state decides they must be sacrificed to close the deficit.

"If those funds were wiped out, there's no one other source you can go to to replace them," she said.