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Putting Brakes on State Spending

Putting Brakes on State Spending

Manchester Journal-Inquirer, January 10, 2020

By Eric Bedner

The state’s budget director has asked all agency heads to identify areas of spending that can be cut and minimize the number of new hires made as Connecticut faces a projected multimillion-dollar deficit to end the fiscal year.

Office of Policy and Management Secretary Melissa McCaw wrote to all state agency heads Monday, telling them to review their spending for the remainder of the year “in order to eliminate expenditures that are not absolutely critical in nature.”

McCaw’s letter comes following Comptroller Kevin Lembo’s projection last week that the state is on track to end the fiscal year with a $28 million budget deficit.

OPM puts the deficit at $22.9 million, due to under-performing revenues totaling $83.5 million and $104.2 million in expenses not accounted for in the budget. As adopted, the biennial budget was expected to result in a surplus of $158 million and $184 million in fiscal year 2020 and fiscal year 2021, respectively. When taking into account the initially expected surpluses, unanticipated expenses, and under-performing revenue, the $22.9 million deficit is what remains.

McCaw noted that the deficit is a relatively small percentage of the overall budget, but nonetheless, “it is imperative that management actions be taken immediately to ensure budget balance is maintained,” she wrote.

After Lembo issues his next budget projection later this month, McCaw said, a list of general fund allotment rescissions for state agencies also will be coming, McCaw said.

Finding savings back to top

In the meantime, agency heads are being directed to find savings “in all areas of spending, including hiring and overtime, travel, contractual services, and purchased commodities,” McCaw wrote.

Considering one request is in regard to hiring, “OPM will closely scrutinize all requests to establish new positions or refill vacant positions, as well as for discretionary promotions,” she wrote. “Agencies should ensure that only the most critical position actions are undertaken for the remainder of the fiscal year.”

Gov. Ned Lamont has been steadfast in his decision not to use part of the Rainy Day Fund, which stands at $2.5 billion and is expecting a deposit this year of more than $300 million.

Administration officials argue that funding the account at this level is necessary in the event of a recession and also is helping the state’s credit ratings due to the stability provided by reserves.

However, McCaw’s letter notes concerns from the state’s nonprofit organizations, which fear cuts could impact services and question why reserves won’t be used.

Gian-Carl Casa, president and CEO of the Connecticut Community Nonprofit Alliance, said that while he appreciates Lamont’s efforts to balance the budget, “We are greatly concerned that with a de facto $300 million surplus, that there is any discussion of emergency budget cuts.”

He urged agencies not to cut essential services, including those for substance abuse and mental health treatment, support and residential programs for people with developmental disabilities, homeless and domestic violence shelters, and re-entry programs.

“Our friends, neighbors, and family members saw their services reduced over the last decade, when budget times were bad,” Casa said. “With the state’s revenues projected to remain stable in the coming years, it is time for funding cuts to be restored and increased so community nonprofits can continue to provide vital programs that make our state a great place to do business and to live and raise a family.”