Gov. Malloy Introduces Budget Adjustments Focused on Realistic Savings for Long-Term Stability
Proposes State Reforms Aimed at Responding to Recent Federal Tax Changes
(HARTFORD, CT) – Governor Dannel P. Malloy today released his Fiscal Year 2019 budget adjustments, building on the framework of the bipartisan, biennial budget adopted last year. The Governor’s proposal focuses on recurring, realistic spending and revenue changes to put the state budget on more stable footing, both in this biennium and into the future.
In addition to achieving balance in the current biennium, the Governor’s proposal offers a new, detailed plan for shoring up Connecticut’s Special Transportation Fund and bringing previously planned projects back online. It also responds to the recent federal tax changes by offering sensible state tax reforms Connecticut can make to protect its residents.
“The budget we are proposing today is about the future – specifically Connecticut’s long-term fiscal stability,” Governor Malloy said. “This plan continues to pay down the state’s long-term obligations, further reduces our reliance on one-time revenues, and identifies clearer and more achievable savings targets in the underlying budget. When it comes to our budget, there are few easy answers left for state leaders – what matters most is that we achieve balance with realistic and responsible changes.”
The Governor’s adjustment proposal:
- Includes expenditure and revenue changes totaling more than $266.3 million. These changes are responsive to the underlying $165 million shortfall identified by the latest consensus revenue forecast, and an additional $100 million of changes to correct unrealistic spending assumptions in the adopted budget or for unrecognized needs.
- Reduces projected out-year deficits by half; decreasing by $1.35 billion in FY20, $1.43 billion in FY21, and $1.49 billion in FY22.
- Takes steps to ensure the long-term solvency of the Special Transportation Fund and restoration of billions of dollars in transportation projects currently deferred.
- Pays the entire State Employees Retirement System (SERS) and Teachers Retirement System (TRS) state contribution and proposes changes to smooth the looming TRS payment spikes.
- Major tax rates are unchanged, but revenue changes include repeals of exemptions and credits or cessation of enacted rate changes.
- Establishes a series of new steps to allow Connecticut’s citizens to receive more friendly tax treatment following the federal tax changes, including changes to pass-through entities, decoupling expensing and bonus depreciation, and allowing municipalities to create charitable organizations supporting local interests.
- Annualizes FY18 budgeted lapses but preserves funding for Alliance Districts and towns most in need by reducing grants in wealthier communities.
- Fully funds Juan F. compliance costs.
- Increases funding to address the emergency placements within the Department of Developmental Services system, thereby alleviating pressure on the wait list.
- Adds additional temporary supports for those displaced by Hurricane Maria.
- Reduces the assessment on the insurance industry by 3.7 percent.