State Budget Update: What Governor Malloy's Two Proposals Would Look Like

Earlier this month, the legislative session closed without passing a budget. This Saturday, the fiscal year ends and, unless the legislature is able to agree upon and pass a budget, Connecticut will be run by Governor Malloy’s executive order. Governor Malloy has stated that he will not sign any of the budgets the Democrats and Republicans in the House and Senate proposed, as the Republican budget relies larger concessions from the unions than the Governor has negotiated and the Democratic budget “leads with revenue” in the Governor’s view. (Read more about the Democrats’ and Republicans’ proposed budgets here).  Yesterday, Governor Malloy released two options for how he will run the state without the legislature passing their own biennial budget: the Executive Order Resource Allocation Plan, which can be enacted without approval of the General Assembly, and a quarterly Mini Budget Resource Allocation Plan, which would need to be passed by the General Assembly. This leaves the legislature with few options. They can create and pass one of they budgets they have already presented (which may be vetoed by the governor), create and pass a new budget, pass continuing resolutions, adopt the Governor’s mini budget, or allow the Governor’s to run the state through his Executive Order Resource Allocation Plan. Keep reading to learn what you need to know about these budget options. 

The Executive Order Resource Allocation Plan:

  • This budget will be adopted if the General Assembly does not pass its own budget that the Governor signs or approve the Governor’s “mini budget”—a budget for the first three months of the fiscal year, beginning July 1.
  • Revenue Options:
    • The revenue options put in place by Public  Act 17-51, which:
      • Removes about $14.1 million from the General Fund by accruing the Volkswagen and Target settlements to the Budget Reserve Fund (BRF).
      • Adds $57.5 million to the General Fund by transferring some money from various funds to the General Fund and delays the repayment of Generally Accepted Account Payments (GAAP) deficits.
    • Outside of Public Act 17-51, the Governor’s Executive Order Resource Allocation Plan Revenue Plan:
      • Transfers about $400,000 to the General Fund by reallocating support for Newborn Screening to the General Fund.
      • Eliminates $27 million in funding from federal grants due to expenditure changes.
      • Transfers an additional $600,000 from other funds into the General Fund.
    • All of this results in General Fund revenues of $17,160 million in FY 2018, an increase of $31.5 million compared to FY 2017.
  • How the budget supports (or doesn’t support) Connecticut’s programs and the residents they serve:
    • The Commission on Women, Children and Seniors:
      • Reduces funding by $215,000 (31%).
    • The Commission on Equity and Inclusion:
      • Reduces funding by $215,000 (31%).
    • Labor Department:
      • Eliminates funding for various programs that promote workforce readiness, including: Two Generation Initiative, ConnecticutCorps Jobs Funnels Projects, Connecticut Youth Employment Program, STRIDE, Spanish-American Merchants Association, Incumbent Worker Training, STRIVE, STRIDE, Second Chance Initiative, Cradle to Career, , New Haven Jobs Funnel.
      • Reduces funding for various employment programs, including: Jobs First Employment Services (cut by $1,400,178, 9%), Connecticut Career Resource Network (cut by $42,740, 27%), and the Apprenticeship Program (cut by $37,500, 7%)
    • Department of Social Services
      • Eliminates funding for a variety of programs, including: Community Action Agency of New Haven, New Opportunities, and TEAM Inc.
      • Eliminates funding for the State-Funded Supplemental Nutrition Assistance Program.
      • Reduces funding by 10% for Safety Net Services and Services for Persons with Disabilities, 20% for Nutrition Assistance, 30% for Human Services Infrastructure Community Action Program, 40% for Food Stamp Training Expenses, and 50% for Community Services and Teen Pregnancy Prevention.
      • Reduces Medicaid funding by $75 million to align with available resources.
    • Department of Early Childhood
      • Eliminates funding for a variety of programs, including: Evenstart, Healthy Start, Community Plans for Early Childhood, and Improving Early Literacy.
      • Reduces funding for Care4Kids by $7,400,000 (6%), keeping it closed to new applicants for FY 2018.
      • Reduces funding for Head Start by $557,184 (1%).
    • Office of Higher Education
      • Reduces funding by 10% for the Minority Advancement Program, National Service Act, and Minority Teacher Incentive Program.
    • Connecticut State Colleges and Universities
      • Reduces funding for Community Colleges by 1.5%.
      • Reduces funding for Charter Oak State College, the Board of Regents, Developmental Services, and Outcomes-Based Funding Initiative by 3%.
    • Department of Education
      • Reduces funding for the Education Cost Sharing (ECS) grant by $516 million.
      • Eliminates funding for a variety of programs, including: LEAP, Connecticut Writing Project, Resource Equity Assessments, Neighborhood Youth Centers, CommPACT Schools, Parent Trust Fund Program, Bridges to Success, Alternative High School and Adult Reading Incentive Program, Special Master, Regional Education Services, and the Young Parents Program.
      • Reduces Funding by 10% for Primary Mental Health, Longitudinal Data Systems, K-3 Reading Assessment Pilot, and the School-Based Diversion Initiative.
      • Reduces funding by 50% for the Family Resource Centers and After School Programs.


Mini Budget Resource Allocation Plan

  • Revenue Options (in addition to those in the Executive Order Resource Allocation Plan):
    • Keeps the EITC at 27.5% rather than raising it to 30%, raising $13 million.
    • Restricts the property tax credits to households with dependents, raising $55.3 million.
    • Implement a tax amnesty program (DRS Fresh Start) for the income, sales, and corporation taxes, raising $60 million.
    • Increases revenue from federal grants due to expenditure changes, raising $22.5 million.
    • Caps various business tax credits, raising $26.5 million.
    • Increases criminal history record check fees, raising $2.6 million (this will heavily impact early childhood providers as the fees are currently waived and federal requirements for background checking childcare workers increase).
    • Increases land recording fees and newborn screening fees, raising $2.1 million.
    • Sweeps a variety of funds, raising $137.3 million.
  • This budget maintains all the cuts of the Resources Allocation Budget, but does restore funding for some programs, including:
    • Department of Revenue Services
      • Provides funding for the DRS Fresh Start Initiative, which will ultimately provide revenue for the General Fund.
    • Labor Department
      • Partially restores ($580,000) the Jobs First Employment Services program.
      • Partially restores the CT Youth Employment Program ($3,500,000).
    • Department of Social Services
      • Partially restores funding for a variety of programs, including: Community Residential Services ($13,390,401), Safety Net Services ($102,271), Nutrition Assistance ($34,466), Community Services ($127,949), Human Service Infrastructure Community Action Program ($398,228), Teen Pregnancy Prevention ($353,135), Family Programs ($149,617).
    • Department of Education
      • Partially restores ECS funding ($180 million).

The Short of It:

While the Governor’s Allocation Plan is harsher than the potential Mini Budget, this is because the Governor cannot implement revenue options without the approval of the legislature.  Additionally, neither budget fully funds the vital programs that help Connecticut’s workers and families, including the Care4Kids program, which faces devastating cuts in both budgets that will keep the program closed for at least another year. In addition, the proposed Mini Budget suggests allowing changes to the Medicare Savings program, harming low-income seniors and the disabled in order to provide additional funds to towns. It is absolutely necessary for Connecticut’s General Assembly to collaborate and produce a balanced and fair budget for all of Connecticut’s residents. If you haven’t before (and even if you have), now is the time to contact your legislators and tell them to bypass partisan barriers and pass a budget that contains reasonable revenue options in order to support all of Connecticut’s residents and improve our economic state.


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