According to the latest budget analysis by the Center for Budget and Policy Priorities, Connecticut faces a $2.9 billion budget deficit in FY 2012 and a $2.7 billion budget deficit in FY 2013. In order to balance the budget, Gov. Malloy emphasized a two-pronged approach of tax increases and negotiated concessions for public spending cuts.
In February the governor introduced an unprecedented slate of tax increases through which the Hartford Courant reports, “Taxes would increase on virtually all taxable items.” (For more on this proposal see my previous post here.) Lawmakers complied in passing $2.6 billion in tax increases that Bloomberg describes as “the biggest increase in state history.” However, the second prong of his approach failed to materialize. Rank-and-file union members rejected a range of wage and benefit concessions negotiated with labor leaders leaving Gov. Malloy with a $1.6 billion budget deficit to balance.
Last week lawmakers granted the governor authority to cut spending in all three branches of state government by as much as 10 percent over the next three months. If last week is any indicator, it’s going to be a contentious three months. An estimated 5,500 state workers face layoffs with layoff notices being sent shortly after rank-and-file union members rejected the concessions, while another 1,000 unfilled positions will be eliminated.
Gov. Malloy is pursuing expanding the use of privatization in addition to layoffs. He’s requested legislative changes to the State Contracting Standards Board, specifically suspending legal restrictions and procedures inhibiting privatization. He told newspaper editorial writers and editors in a conference call last Wednesday:
I'm asking for additional ability to privatize services. There are a whole bunch of people in the world who think they are the only people who know how to operate a plow. I got news for you; other people know how to operate a plow.
According to the Hartford Courant:
(This) was an apparent reference to Department of Transportation snowplow operators, who are part of one of the state employee unions that voted in recent weeks to reject the concessions agreement that would have provided a four-year no-layoff guarantee in exchange for changes in employee health care and pension benefits.
The governor faces a daunting task and is moving forward with several reform efforts. First, he fulfilled a promise made in his state of the state address to divest Bradley International Airport into an independent entity. This is a proven and welcome reform that will save the state money, improve airport operations and reduce taxpayer liability. The newly established Connecticut Airport Authority now has day-to-day control of the airport. Second, he is moving forward with closing the Bergin Correctional Institution in Mansfield-Storrs, Connecticut. After ending public operation of this facility, Gov. Malloy should consider leasing or outright selling the facility to a private operator interested in using it.
For ideas on how to cut spending and streamline government, Connecticut policymakers should consult Privatizing “Yellow Pages” Government, a thorough study released this spring identifying dozens of opportunities for privatization in neighboring Pennsylvania. The study is a collaboration between Reason Foundation and Commonwealth Foundation and is available online here.