Connecticut Governor Releases Fourth Budget Proposal -- Update
October 16 2017 - 5:50PM
Dow Jones News
By Joseph De Avila
Connecticut Gov. Dannel Malloy is hoping the fourth time's a
charm.
Nearly four months after the start of the fiscal year in July,
Mr. Malloy on Monday released a new budget proposal, his fourth for
this fiscal year. It comes amid protracted negotiations with
lawmakers on how to eliminate a two-year, $3.5 billion shortfall
and as the state faces threats of further credit rating
downgrades.
The governor's latest proposal includes spending cuts for
education, municipal aid and social-service programs. It also
eliminates some surcharges and new taxes on seasonal homes that
Democrats had proposed earlier this year.
"Folks, it is a slimmed down budget," Mr. Malloy, a Democrat,
said at a news conference Monday. "I'm trying to meet people where
I can meet them, where I think it's legally plausible to meet
them."
Credit-ratings firms are keeping a close eye on the budget
standoff. S&P Global Ratings said Friday the state could be
headed for another credit downgrade as the budget impasse continues
to drag on. The firm lowered the state's rating from AA- to A+ in
May.
Moody's Investors Service said Monday it placed 26 Connecticut
towns and cities under review for downgrades, citing the prolonged
budget impasse. It also assigned negative outlooks to ratings for
an additional 25 municipalities.
Mr. Malloy signed an executive order at the start of the fiscal
year on July 1 to keep state operations running until a full budget
agreement passes.
Monday's budgetproposal is the governor's first counteroffer
after he vetoed a budget plan passed by the legislature in
September.
The governor said that the budget from state lawmakers was
filled with gimmicks and would invite legal challenges from
public-sector unions for making changes to the pension systems for
teachers and state employees.
In his latest budget,Mr. Malloy has kept one of his most
controversial proposals in his latest proposal: shifting $281.6
million in teacher pension costs from the state to municipalities
over the next two years. The governor says it is unsustainable for
the state to continue to pay for teacher pensions while cities and
towns pay nothing. Mr. Malloy said municipalities will be able to
make budget changes to absorb the new costs.
The new budget immediately drew fire from the governor's
political opponents.
"It is obvious that the governor's proposal, including his
devastating cuts to certain core services and shifting of state
expenses onto towns and cities, would not pass the legislature in
its current form," said state Sen. Len Fasano, the Senate's
top-ranking Republican.
State Sen. Martin Looney, the Senate's top-ranking Democrat,
said he would review the governor's budget proposal. As budget
negotiations continue, GOP and Democratic leaders have told their
members to be available the week of Oct. 23. to possibly vote on a
plan.
Municipalities across the state also came out in opposition to
the plan.
"The budget leaves towns with very few options but to increase
property taxes," said Betsy Gara, executive director of the
Connecticut Council of Small Towns.
Mr. Malloy's proposed budget also provides the cash-strapped
city of Hartford with an additional $46 million and creates a
review board to oversee the capital city's finances. City officials
have said Hartford could declare bankruptcy by November without
more help from the state.
Write to Joseph De Avila at joseph.deavila@wsj.com
(END) Dow Jones Newswires
October 16, 2017 17:35 ET (21:35 GMT)
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