State legislators have been told to prepare for a special session before Christmas to deal with the state’s growing financial problems, sources said Friday.
Republicans have been calling for a special session, saying that Gov. Dannel P. Malloy must submit a deficit-mitigation plan under state law because the projected deficit is more than 1 percent of the state’s general fund.
The General Assembly had been expected to remain in recess until the full, regular session starts in early January. But the problems with the state budget have grown large enough to merit the attention of the legislature.
The state is facing a projected deficit of $365 million in the current fiscal year that ends on June 30. Malloy retains certain powers in cutting small parts of the budget, but any large cuts must be approved by the state legislature.
Senator Rob Kane, the ranking Republican on the budget-writing appropriations committee, said he is not optimistic that Malloy and the Democratic-controlled legislature will cut $365 million in spending to cover the deficit.
“I’m just fearful that all they’ll do is borrow again, like they did a few years ago,” Kane told Capitol Watch. “That kicks the can down the road even further. We put together a budget [in the Republican caucus] that had zero taxes. This legislature chose to go the opposite way with the biggest tax increase in state history. It just proves you can’t tax your way to prosperity.”
Regarding Malloy’s comment Thursday that the state is facing a “shortfall” instead of a deficit, Kane said, “That is really funny in my mind. … It’s a deficit. Let’s face it. Let’s stop sugar-coating it. Let’s tell people the truth.’’
Kane added, “Last week, he said to talk about a deficit was premature. He’s looking for one-shot deals – wasn’t that what red-light cameras and Sunday sales were? They’re all revenue grabs with no real gumption to cut spending. In 2010, candidate Malloy said he’d only raise taxes as a last resort, and we got the largest tax increase in state history. He painted himself as a moderate, and I thought he would come to us and say this legislature is so far left. Instead, he pushed his policies even farther left. I don’t believe he has the ability or the willingness to cut spending.’’
Kane questions whether spending will be cut because he says that Malloy has no demonstrated history of reducing spending.
“We felt that he was a moderate or, dare I say, a conservative Democrat,” Kane said. “In fact, it turned out the other way.’’
In response to Kane, Malloy’s senior advisor, Roy Occhiogrosso, said, “Tell him to relax. The governor understands the nature of the problem. The governor is committed to Connecticut living within its means. It will not require new taxes. Tell him that everything will be fine. He’s running around like his hair is on fire.’’
Occhiogrosso added, “The governor will submit a deficit mitgiation plan some time in the next couple of weeks that will eliminate the shortfall.’’
Concerning the criticism, Occhiogrosso said, “If the Republicans are still smarting from the results of the election, we get it. They’re angry. They’re sensitive. … The people understand that we have some real challenges, but we’ve made some progress. The Republicans can run around and yell and scream. That will not fix the problem. The governor will provide steady, calm leadership.”
Since the exact schedule is not yet set, some questions still remained about the special session. One insider said Friday that it would be “probably a long day” if the session can be completed in one day.
With some lawmakers out of town, the legislature is not expected to meet during the week of Christmas.
Besides facing a projected deficit of $365 million in the current fiscal year, the state is facing another deficit of $1.18 billion in the next fiscal year – according to the latest financial statistics. The red ink would continue for another two years after that – at more than $900 million per year.
The state’s tax collections are lower than expected, despite tax increases totaling $1.5 billion, including those on income, retail sales, corporations, estates, electric power plants, alcohol, cigars and cigarettes. Malloy’s budget increased taxes on more than 50 items in different categories, including charging sales tax for the first time on previously tax-free items such as nonprescription drugs, clothing and shoes under $50, pet grooming, automotive towing, manicures and pedicures. The tax on retail sales increased to 6.35 percent, while the maximum rate on the state income tax increased to 6.7 percent for those with the highest incomes.
Despite the numbers, Malloy refused to use the word “deficit” and instead said the current situation is a “shortfall.”
“This is not a deficit,” Malloy told reporters Thursday at the state Capitol. ”It’s a shortfall.”
Since last week, House Republican leader Larry Cafero has been blasting Malloy for a lack of transparency in the budget numbers. He said that bad news was dumped on reporters November 9, late on a Friday afternoon when few people were paying attention as they headed into the weekend. Cafero decried the notion that state tax revenues were $52 million below what was expected, saying that the number was clearly wrong.
“We have a budget deficit, four months into the fiscal year, that requires a deficit mitigation plan,” Cafero told Capitol Watch last week. ”For the governor to come out with a press release using the figure $52 million is wrong. At worst, it’s deceiving and deceitful. Where does he get $52 million when the report itself says $128 million?’’
“For the governor to put out a press release on $52 million is the least transparent, most deceitful thing I’ve seen,” Cafero said. “It’s wrong. It is very wrong, and that is unconscionable.”
When asked Thursday by Capitol Watch about Cafero’s comments on transparency, which has been one of the repeatedly stated tenets of the administration, Malloy said, “He’s wrong. Representative Cafero has expressed his desire to become governor of the state of Connecticut. You folks are going to have to get used to putting everything in context, and I’m sure that that will appear in your papers every time you report what he has to say. Having said that, he’s wrong. I don’t know how else to say it. The data is the data. The data becomes available when it’s available.”
Cafero rejected Malloy’s statement, saying he has made no decisions about running for governor. Regardless, he said late Thursday afternoon that the budget numbers are a fact.