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Growth in state gov't unsustainable

Published May 06. 2014 4:00AM

Gov. Dannel P. Malloy's failure to win stiffer concessions from state labor unions early in his term continues to plague his administration. It is the reason that Gov. Malloy and his fellow Democrats have again turned to the budgetary gimmicks for which he criticized his predecessor.

While not as egregious as some of the budget chicanery that took place before Gov. Malloy's arrival in office, the result is the same, it is only a matter of degree. If current spending and revenue trends play out, the governor and legislators who start working on the first state budget after the November election will face a $1.33 billion deficit before they begin. Projected revenues will fall 8 percent short of anticipated spending, according to the nonpartisan Office of Fiscal Analysis.

That would mean big tax increases, or spending cuts, or both. While not as bad as the roughly $3.5 billion deficit Gov. Malloy inherited, it's not good.

"A crisis is a terrible thing to waste," first noted economist Paul Romer in 2004. Gov. Malloy missed the opportunity provided by the crisis he arrived in office facing.

While he handed taxpayers a whopping tax increase, the administration did not come close to wringing out of the state labor unions the savings Gov. Malloy initially sought. And the governor gave back too much to obtain the concessions he did receive; promises of no layoffs and mandated pay raises through the end of his first term.

Budgets have steadily grown throughout Malloy's time in office. With agency mergers, improved efficiency and staff reductions through attrition, the growth in government spending slowed, but it continued.

Over the weekend the governor worked with fellow Democrats in control of the House and Senate to pass an amended $19 billion budget for the fiscal year that begins July 1, boosting spending 2.5 percent. It will be the last passed during the governor's first term and the one he must defend in running for re-election.

Gov. Malloy and Democratic lawmakers deserve credit for many of their budget priorities. The budget makes good on the governor's pledge to continue reforming education, with a $98 million education spending increase, a boost in state aid to local school districts, and increasing by 1,020 the number of young children enrolled in school readiness programs.

There is also $33 million in increased state aid for cities and towns on the municipal side of the budget. It maintains human-service program spending.

The budget, however, does not deal honestly with the fiscal realities the state faces. Because of disappointing tax revenue numbers, a $500 million surplus projected through the end of the fiscal year shrank to $43 million. More importantly for the budget under debate, a reduction in the tax revenue projections going forward created a $285 million hole in the budget Democrats were working on.

Rather than finding the spending cuts or, alternatively, tax increases, Democrats got creative.

The budget counts on recovering $75 million in delinquent taxes and Medicaid fraud, a dubious and convenient projection. It ignores Comptroller Kevin J. Lembo's projection that the state will need $52 million to cover a surge in retirements in the Department of Corrections.

As the Connecticut Mirror notes, it also sweeps $32 million from the tobacco lawsuit settlement fund; from this year's small surplus; and from reserves intended to complete the conversion to Generally Accepted Accounting Principles, a Malloy campaign promise.

The budget passed both the House and Senate on largely party-line votes. Rep. Edward Moukawsher of Groton was one of only a few Democrats to vote in opposition.

He noted - quite correctly - that the budget passed is not sustainable.

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