Stop the damage, compromise on budget

T he failure of the state legislature and Gov. Dannel P. Malloy to come to terms on a budget is causing damage to public education, curtailing municipal services, threatening to raise interest rates on borrowing for city and town projects, and is a drag on the economy.

It is long past time for the state’s elected leaders to agree to some difficult compromises and get a budget passed. Both Democrats and Republicans have to get realistic about the combination of budget cuts and revenue increases that will be necessary to close a projected $3.5 billion fiscal gap over the next two years.

Connecticut is three and one-half months into the fiscal year without a budget. The evidence of the damage caused by the fiscal stalemate grows.

On Monday the New London City Council slashed $4.2 million from the $41.7 million education budget it had approved only weeks earlier. The cut is excessive and the council side-stepped sharing the pain when it declined to also make cuts in city services. Local elected leaders face these difficult and controversial choices due to the inaction in Hartford.

For the third time since approving the city’s budget, the Norwich City Council on Monday delayed filling vacant positions, while holding planned layoffs in abeyance in hopes the legislature will soon pass a budget and clarify how much state aid Norwich can expect.

Also on Monday, Moody’s Investors Service announced that 51 municipalities, including several in our area, and six regional school districts in the state face lower bond ratings and higher interest rates on the $7 billion in debt they collectively hold if the state budget standoff continues.

The budget crisis is likely to dampen business hiring and investment. And as projects stall for lack of funds, jobs will be lost.

Malloy, managing the state without a budget in place and without the ability to tap any new revenues, can only avoid a deficit by spending less.

“If you think it’s bad now, in a month’s time this is going to look like this was fun,” Malloy warned when we talked with him Tuesday.

The governor had a budget on his desk in September, pushed by the Republican minority and having gained sufficient votes from Democrats to pass. Malloy vetoed it.

The easy move by Malloy, who will not seek re-election in 2018, would have been to sign and move on, despite the flaws in that budget. Yet he chose instead to block it because of his legitimate concerns.

It would have reduced contributions to the already underfunded pension plan by $322 million over the next two years, anticipating savings that can be achieved when the state employees’ retirement benefits and pension contract expires in 2027. The legislature should use its statutory authority to rein in labor costs when that deal ends, but it would be a repeat of past mistakes to defer payments now.

The vetoed budget would have diverted teachers’ pension contributions to the general fund. And its hundreds of millions of dollars in cuts for the University of Connecticut and the state’s other universities and community colleges were too steep.

The governor this week rolled out his fourth budget proposal. It still cuts education aid to wealthier communities, but not as severely. It eliminates some unpopular tax increase proposals, such as a surcharge on cell phone bills, a first-time state property tax on second homes and a fee on fantasy sports games. And Malloy dropped a proposal that he has championed: expanding support programs intended to keep young offenders from cycling back into the criminal justice system.

Malloy appears ready to accept cuts for higher education, just not as deep, and finding different ways to parcel out municipal aid, as long as necessary savings are achieved.

“I remain willing to move on expenditures just not on principles. I won’t sign a budget that’s based on gimmicks,” he said. “I am not willing to sell my soul for a budget. I would love to have them send me a budget that they know I could sign as opposed to one that I would have to veto.”

Malloy’s lines in the sand are reasonable. They include not again deferring pension payments, not leaving the governor to find cuts with no specifics, and not including phony assumptions.

Republicans and Democrats in the legislature need to set the politics aside and compromise on a balanced budget that includes hard choices but stays within the principled guidelines established by the governor.