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05/15/2017

Gov. Malloy: Updated Budget Proposal Designed to Provide Greater Fiscal Stability and Predictability

Revised Proposal Decreases General Fund Expenditures over the Prior Year’s Appropriation

(HARTFORD, CT) – Governor Dannel P. Malloy today released an updated Fiscal Year 2018-2019 biennial budget proposal, which was designed to maintain the administration’s goals of providing more fiscal stability and predictability for taxpayer, businesses, and local governments, while continuing bolster the state’s efforts to grow the economy and create jobs.

With April tax receipts underperforming expectations, this proposal cuts General Fund expenditures an additional $241 million and other funds by $363 million in FY 2018, compared to the balanced budget proposal Governor Malloy submitted to the legislature in February. Notably, these reductions mark a General Fund expenditure decrease over the prior year’s appropriation.

By reworking the budget proposal to reflect actual revenue receipts, the administration will ensure that it enters budget negotiations with legislative leaders with a working, balanced budget proposal.

“The state must live within its means. We cannot spend more than we take in. That’s why, when revenue came in lower than expected in April, we went back to the table to redraft our budget proposal,” Governor Malloy said. “This session, the best outcome we can achieve for the people of the state is to adopt a responsible, balanced budget that does not rely heavily on new or increased taxes.”

The updated proposal is the result of constructive conversations with various constituencies. It also incorporates some proposals brought forth by the legislative caucuses.

Key provisions in the updated proposal include:

  • Incorporation of constructive ideas
    • Adds English Learners as a separate weighting factor in the school funding formula.
    • Municipal share of TRB contributions are capped at $400 million until such time that normal costs begin to exceed $400 million.
    • Implements ideas from the Republican proposal, such as the transfer of sales tax on motor vehicles to the Special Transportation Fund and a requirement that the Lottery Corporation reduce spending in order to provide more to the general fund.
  • Responsible management of long-term obligations
    • Maintains our commitment to fully funding the state’s pension obligations.
    • Finishes paying off the state’s Economic Recovery Notes by the end of FY 2018.
    • Puts the General Fund nearly $30 million in surplus.
  • Municipal aid
    • To maintain the large categories of municipal aid, smaller grant programs are eliminated.
    • Maintains the Governor’s commitment to increasing aid to urban areas that are facing grave fiscal challenges and increases oversight on how those dollars are spent.
  • Revenue
    • The bulk of the revenue changes come from three areas: curtailing the transfers to the MRSF and Pequot and Mohegan Fund; increasing the real estate conveyance tax on properties valued above $800,000; and elimination of the sales tax exemption for non-prescription drugs.
  • State workforce
    • Continues to call for $700 million in savings in FY 2018 through a new agreement with SEBAC, or by other means if necessary.
    • Makes some changes to the fringe benefit accounts based on actual experience in FY 2017 as the state experienced a large reduction in the state workforce in the past year.

**Download: Governor Malloy’s revised FY 2018-FY 2019 Biennial Budget Proposal introduced on May 15, 2017

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