Malloy's
budget chief confirms $365 million state deficit
November 15, 2012
From: The Federation of Connecticut Taxpayer
Organizations
Contact: Susan Kniep,
President
Website: http://ctact.org/
Email: fctopresident@aol.com
Telephone: 860-841-8032
Our Ship of State is Sinking!
Dragged Down by Heavy Debt, State Spending, and the Ultimate Payment
of 9% Wage Increases to State Employee Unions Over Three Years Under a
No-Layoff, Job Guarantee Contract!
Will Governor Malloy Cut
Municipal Aid this Year or Next and Drive Up Local Property Taxes? Will the State Legislature Provide Relief to
Municipalities through State Mandate Reforms?
As we Weigh
These Outstanding Questions, Let’s Look at what is Currently Being Reported!
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Keith M. Phaneuf and
Arielle Levin Becker of CTMirror.org reported at 5:53 am today that Malloy's budget chief confirms $365 million state deficit driven
by cost over-runs in the state’s Medicaid program…..! Malloy is forced to
prepare a plan to lower the deficit. Barnes' testimony
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CtMirror.org also noted Fixing how schools are financed: Top panel considers more
spending and the Courant reports Municipalities Want More State Money For Schools
CTMirror.org
just reported: The state budget is $365 million in the red, nearly double the
level needed to compel Gov. Dannel P. Malloy to
prepare a plan to lower the deficit, the governor's budget chief told
legislators Wednesday. Office of Policy and Management Secretary Benjamin Barnes also confirmed in his testimony
to the Appropriations Committee that huge
cost-overruns in the state's Medicaid program, coupled with declining revenues,
are driving the shortfall. "All told,
these changes result in a projected deficit of $365 million" in the
current fiscal year, wrote Barnes, whose next official budget estimates are due
to Comptroller Kevin P. Lembo Tuesday. "Assuming they are
certified by the comptroller on Dec. 1, (they) will require that the governor
submit a deficit-mitigation plan to the General Assembly before the end of the
calendar year." Whenever the comptroller certifies a deficit larger than 1
percent of the general fund, state law requires the governor to submit a plan
to lower the deficit to lawmakers. In this year's $20.54 billion total budget, the general fund -- which covers most operating expenses -- totals $19.14 billion,
putting the 1 percent threshold at $191.4 million. Barnes' testimony
came as the legislature's budget-writing panel began a review of cost overruns
in the state budget. The first indications that state finances had worsened
significantly came Friday when the administration and the legislature's
nonpartisan Office of Fiscal Analysis issued a joint report that
lowered revenue expectations $128 million below the level in this year's
budget, which the legislature adopted in late June. That report, which dealt
only with revenues, would have expanded the deficit for the current year beyond
$200 million. But that revenue report also showed federal grants to help
Connecticut pay for its Medicaid program were growing -- something that only
happens when the state's costs for providing medical services to the poor were
escalating even faster beyond budgeted levels. Ben Barnes, secretary of the
state Office of Policy and Management, testifies Wednesday in front of the
legislature's Appropriations Committee. (Photo by Arielle Levin Becker) That
picture became much clearer Wednesday when legislative and executive analysts
reported $220.5 million to $240 million in projected cost overruns throughout
the entire general fund. This includes at least $190.9 million in the Medicaid
program. Medicaid costs surging Continue reading at ….. https://www.ctmirror.org/story/18201/malloys-budget-chief-confirms-365m-deficit-testimony-legislature
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Connecticut Taxpayers and Property Owners:
The State
Deficit exceeds $350 Million and is growing with what appears to be very little
control of the spending of our tax dollars!
Soon we will
be meeting the requirements of the state employee contracts calling for a 9% wage
increase over three with a no-layoff job guarantee.
Limited
resources at the State could translate to an ultimate reduction in Municipal
Aid to the 169 municipalities throughout the state. This in turn would drive up local property
taxes on businesses and homeowners who are forced to meet the demands of local
union contracts which account for approximately 80% to 90% of municipal
budgets.
State
Legislators must be convinced that municipalities and taxpayers need relief
from State mandates, to include, but not limited to, Binding Arbitration and
Prevailing Wages Laws. This would allow
municipal officials the ability to control their budgets and personnel. Ask the Mayor, Town Manager, Legislative
Body, and other officials of your town to immediately contact your State
Legislators and force the issue of Mandate Reform in the Legislature. We will be providing more information on this
matter.
The following
recaps information we have been providing over the past few months on the State
of our State.
If you have
questions or are concerned, please contact fctopresident@aol.com.
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As the State focuses on
bankrolling businesses Connecticut Taxpayers are Already Taxed to the Max as the Summary of State Revenues by Fund, Tax
Type and Account for Fiscal Years
2007 through 2012 illustrates as prepared by Robert Young, Secretary, of the Federation of Connecticut Taxpayer
Organizations.
For months, the
Federation has been alerting Connecticut
taxpayers to what we perceive to be the unrestrained spending by the Governor
and our State legislature which could ultimately lead to a reduction in State
aid to municipalities and in turn, local property tax increases on homeowners
and businesses. A recent headline has
now confirmed our suspicions as Malloy 'can't make any promises' about
town aid in next budget.
TAXPAYERS PAID OVER 5.7 BILLION DLRS
FOR STATE OF CONNECTICUT HEALTHCARE COSTS IN 2012 .
Read Barron’s State of the
States where Connecticut
is Ranked at the Bottom http://online.barrons.com/article/SB50001424053111904881404577603301566976464.html#articleTabs_article%3D1
Excerpt: By the
measure we use, which looks at the combined debt and unfunded
pension liabilities relative to GDP in each of the 50 states, South Dakota comes out
on top. The state has a strong agricultural economy and a low jobless rate of
4.4%, about half the national average. Debt and unfunded pensions add up to
just 1% of GDP. Connecticut, which ranks at
the bottom of the list, has a combined score of 17%. Yet the bonds in both states are priced alike, at 28 basis
points above the 10-year AAA-rated benchmark, which yields around 1.8%. A basis
point is one-hundredth of a percentage point…………….Moody's downgraded Connecticut's general-obligation debt in January,
to Aa3 from Aa2, citing "high combined fixed costs for debt service and
post employment benefits relative to the state budget" and pension funding ratios that are "among the lowest
in the country" at around 50%.........its
former status as a top-rated state -- an idea that the whole state is one big
version of Fairfield County, the wealthy region that includes tony towns like Greenwich, Darien, and Westport. Connecticut's major cities, including Bridgeport and New Haven, are
depressed and a drain on the state's coffers. Once known as a low-tax
alternative to neighboring New York, Connecticut now
has the third highest state and local tax burden in the country at 12% of per
capita income, behind New York and New
Jersey, according to the Tax Foundation……….New
York has a reputation for excessive government spending and onerous taxation.
That's borne out by the state's enormous Medicaid tab, but New York's pension
funding level of 94% is one of the best in the country, putting it in much
better shape than neighboring New Jersey or Connecticut………..
In the CPI Pension Paper Draft Sept 10 -
Connecticut Policy Institute
captioned Connecticut’s Public Pension Liabilities dated Sept 14, 2012 they
note: Connecticut’s longterm pension and healthcare liabilities for its public
employees are the sleeping giant of state policy challenges. When calculated using private sector account
methods, Connecticut
has more than $60 billion of unfunded liabilities across the state’s three main
pension benefit fund and its retiree healthcare benefits fund. When combined with Connecticut’s roughly $20 billion in bonded
debt, this is more than $80 billion of total state debt – nearly 40% of state
GDP and the third highest debt per capita in the country. Continue reading this excellent report at http://www.ctpolicyinstitute.org/content/CPI_Pension_Paper.pdf
Connecticut Falls in 2012 CNBC Business Ratings CNBC released its
annual business ratings this week. Connecticut did not fare well, falling into
the bottom 10 states overall. Connecticut
ranked 44th overall, down from 39th last year. The state finished ahead of only
Nevada, Mississippi,
Alaska, West Virginia,
Hawaii, and Rhode Island, which ranked last for the
second consecutive year. Continue Reading at http://gov.cbia.com/inside_the_capitol/article/state-falls-in-annual-business-ratings
Connecticut named as the worst state to retire
According to topretirements.com,
the nutmeg state is, in fact, the worst place to retire. As a matter of
fact, five of the six New England states are
in the top ten on this unflattering list. Connecticut ranks number one because of high property and income taxes, a high
cost of living in general and the fact that pensions are taxed. "Very hard to survive. Your taxes are high in Connecticut. Everything
is so high,” said Marcie Thayer of Southington,
Conn. Continue Reading at http://www.necn.com/02/09/12/Connecticut-named-worst-state-to-retire/landing.html?blockID=648370
Moody's Downgrades State Bonds - Collections - Hartford
Courant Moody's Investors Service cited the state's
high debt, racked up by substantial borrowing through the years, and depletion
of the state's rainy-day fund for fiscal emergencies. Legislators drained the
emergency fund to cover budget deficits during the deep recession that severely
limited the state's tax collections.
Continue reading at http://articles.courant.com/2012-01-20/news/hc-moodys-downgrade-0121-20120120_1_wall-street-rating-agency-state-income-tax-dannel-p-malloy
Recently, the Connecticut Conference of Municipalities
(CCM) released a report as highlighted by CTNewsJunkie.com in their article
captioned Municipal Lobby Shines Light On
Property Taxes, Gears Up For Legislative Debate and CTMirror.org in their article Communities still
feeling the property tax bite, municipal lobby says. Therein, CCM notes that “Connecticut's 169 cities and towns,
along with their boroughs, fire districts and other political subdivisions,
levied about $8.7 billion in property taxes in 2009-10, the last fiscal year
for which CCM has complete records, Finley said, adding that the total, once
updated, likely would clear $9 billion for the current year. “Property taxes provide about 72 percent of
the revenue for municipalities, while state aid -- which stands at about $3
billion -- represents 24 percent, according to CCM.” You may find
it interesting to Compare the Mill Rate in Your Town With
Other Towns .
Within a Municipal Lobbying Group Addresses Escalating Property Taxes , the Federation Offers Suggestions on How Town Leaders Can
Work to Reduce Property Taxes recognizing that the Elephant
in the Room which many are ignoring as it relates to the issue of escalating
property taxes are State Collective Bargaining and Binding Arbitration Laws
which have put public sector unions in control of cost drivers such wages,
health care, pensions and management related issues. Personnel related costs account for
approximately 80% to 90% of Municipal and Board of Education budgets throughout
the State. These costs are determined by
arbiters if union contracts cannot be settled between management and
labor. In addition, Past Practice has
been upheld by arbiters if a benefit to the employee has continued without
interruption even if the benefit is not referenced within their union contract.
Example: The right of union members to drive town-owned vehicles home versus a
Town Manager or Mayor attempting to end the practice due to budget
constraints. Arbiters have ruled that
current union members can continue the practice while proposing the practice
cease for new hires
Another
question to ponder is – Is there Too Cozy a Relationship Between the Governor, the State Legislature and the
State Employee Unions
as Healthbridge Sues alleging… “the pattern of actions by SEIU,
including enlisting politicians and liberal activists in efforts to shame the
company into a more generous stance toward its workers, are criminal extortion
under the RICO Act, a federal law often invoked in cases of organized crime and
racketeering. "This action is not about strikes or union organizing or
collective bargaining," the suit says. "It is about a corporate
campaign, endorsed and effectuated by Defendants and facilitated by the
politicians they support, that is in its essence a shake-down by a lawless
enterprise." SEIU
is the Service Employees International Union