February 10, 2013

Malloy Budget Proposal Pushes Financial Problems to Future

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HARTFORD — The budget proposal unveiled recently by Gov. Dannel Malloy pushes Connecticut’s financial problems into the future through unprecedented borrowing that furthers the uncertainty slowing our state’s economic revival, state Rep. Lezlye Zupkus said.

The two-year plan from Malloy carries a $1.8 billion spending increase over two years despite the state’s projected $2 billion deficit. He also proposes borrowing more than $3 billion over the same period not only for a massive University of Connecticut expansion, but also for core municipal funding, state operating expenses and to prop up the state’s depleted cash account.

“Anyone who manages a municipal, household or business budget will almost certainly be skeptical about whether any of this will work, let alone how we’ll pay for it,” said Zupkus, who represents Bethany, Cheshire and Prospect. “Unfortunately, the governor’s message to the public about the benefits of his proposal just doesn’t match the details buried inside.”

The governor, who pledged to avoid tax increases, has promised to increase education funding but does so by raiding existing funding sources for cities and towns. He borrows money to cover municipal aid accounts typically included in the state’s operating budget—road repair money, for example. At the same time, the governor calls for the elimination of the car tax as well as nearly $25 million typically set aside for school transportation funding—moves that could place stress on local budgets and perhaps force municipal leaders to increase local property taxes to cover their costs.

“Simply put, this plan could leave cities and towns with big headaches,” Zupkus said.

Taxes on business that were scheduled to end will instead continue under the Malloy plan, a fact Zupkus contends could disrupt an employers’ plans to reinvest, expand and hire more workers.

The proposed spending increase and massive borrowing plan are unlikely to sit well with credit rating agencies who have already expressed concern about the state’s finances.

“Stability is what fuels private sector growth,” said Zupkus, a member of the legislature’s Commerce Committee. “This budget proposal falls far short of providing any business owner with a clear picture about where the state stands, let alone confidence that government won’t impose a fresh tax increase or fee on business to get beyond the next financial hurdle.”