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Parting Plan? Malloy Offers Lamont Insights On Multi-Billion-Dollar State Deficit

Gov. Dannel P. Malloy
Gov. Dannel P. Malloy Photo Credit: Daily Voice file

During the gubernatorial debates, Democrat Ned Lamont said his first order of business would be to craft a fiscally-responsible state budget within 90 days.

The clock is ticking, and outgoing governor Dannel P. Malloy offered the governor-elect some tips.

Malloy suggested some strategies to avert a multi-billion-dollar deficit that Connecticut could face over the next two years — if solutions remain elusive.

Malloy suggested that Lamont, a Democrat from Greenwich, tap into state reserves to avoid tax hikes.

Other deficit-trimming options Malloy cited in his transition budget include:

  • Canceling tax cuts
  • Shifting teacher pension costs onto municipalities
  • Maintaining a new hospital taxing arrangement that leverages federal aid
  • Trimming public employee totals through attrition
  • Reducing municipal aid by about $138 million annually without harming the poorest communities
  • Cutting health care programs.

“These options would be difficult, and would involve real sacrifice by various constituencies,” Office of Policy and Management Secretary Ben Barnes, Malloy’s budget director, wrote to Lamont. “The Malloy administration did not repeatedly put hard choices like these on the table without significant forethought, knowing that many in the legislature may have preferred to take a different approach including more revenue. But if the General Assembly is willing to work with you on a combination of such ideas, closing the (fiscal year) 2020 shortfall without a tax rate increase is achievable.”

As new revenue sources, the two-term governor suggested Lamont considering highway tolls, legalizing and taxing recreational marijuana use and imposing a fee on recently legalized sports betting.

Lamont has said he favors restoring tolls on state highways for out-of-state tractor-trailers.

The “shortfall” Barnes cited involves an administration projection that state finances, unless adjusted, would run $1.7 billion in deficit in the first fiscal year of Lamont's tenure. The budget gap could approach $2.37 billion in the second year.

Connecticut has $1.2 billion in emergency reserves known as the "rainy day" fund.

Lamont has said he is wary of tapping those reserves, saying they should be preserved as a buffer against the next recession.

Lamont said, "I think people have elected us to make some big changes going forward, so I don’t want to patch, patch, patch through the rainy day fund and other short-term fixes. I want a real fix.”

The rainy day fund balance is projected to climb from $1.2 billion to $2.1 billion — the largest in state history.

“Governor Malloy is required by statute to prepare this tentative budget, and I appreciate the work that went into preparing it and all of the work his team has done to ensure a smooth transition,” Lamont said in a statement. “My team and I will review it as we prepare a new, balanced budget that prioritizes economic growth.”

Lamont, who announced his transition team after his Nov. 6 election, said developing plans to stabilize the budget and spur economic development are among their top priorities.

Lamont must submit his first two-year budget proposal to the General Assembly in February.

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