UPDATE: Republicans Say State Budget Shortfall is Closer to $400M

Connecticut Gov. Dannel P. Malloy announced Monday morning that the state will have to make another $118.5 million in budget cuts largely because of the downturn on Wall Street and the fact that personal incomes have not risen as much as anticipated.

Malloy’s announcement comes on the heels of $103 million in emergency reductions he made last month. Malloy did say that no tax increases are planned.

“More hard decisions will have to be made,” Malloy said during his live press conference at the Governor’s Office.

Malloy called for a “Special Session” and said while he has the power to make the decisions himself, he wants to have the General Assembly and his office work in a bipartisan manner to make the “tough decisions.”

“Everyone needs to be a part of the solution,” Malloy said. “My message is to lets make decisions together and to have bipartisan talks.”

Malloy said it’s obvious some worthy items that should be funded will need to be reduced. Malloy said he’ll lay out his budgetary priorities next week.

He said the state is living in the reality of a post-recession economy. Malloy said the state must create a better business environment and work to be one of the most competitive states for business.

Malloy told assembled reporters that no solution is off the table, but hoped a “Special Session” would make the state stronger.

Malloy said that out of a $20 billion budget, a $120 million reduction can be done.

While Malloy said all options are on the table, he did indicate cuts to planned transportation initiatives seem illogical.

“I-84’s gonna fall down in Hartford. The mixmaster is gonna fall down in Waterbury,” Malloy said, while adding the state’s poor transportation infrastructure is hurting its business climate.

Malloy said all of the union contracts expire on July 1 except for one group and he said labor needs to be “at the table,” though he said he declined to negotiate through the media.

Malloy’s approval rating has sunk to a low of just 32 percent.

Republican response

Senate Minority Leader Len Fasano (R-North Haven) and House Republican Leader Themis Klarides (R-Derby) released the following statement Monday in response to the Governor Dannel P. Malloy’s call for bipartisan budget talks.

“Connecticut has a long way to go to fix the financial mess Democrats single handedly created in our state. As Republicans have constantly shown over the past year, we stand ready and willing to work collaboratively with lawmakers on both sides of the aisle to do what is best for the people of Connecticut. But lawmakers should not be forced to negotiate in the margins of a budget that is entirely void of sound fiscal policies.

“The reason why we are facing shortfalls today is because this budget was broken from the start. It is not Wall Street that is causing our financial problems, it’s the fact that the state budget was built on false assumptions and was in deficit as soon as it was enacted. That’s why we have to take on a holistic approach in a special session to completely rethink the budget in both the short and long term.

“We need structural changes, tax reform, a constitutional transportation lock box among other real changes to affect a more positive economic picture for Connecticut’s future. We also cannot confidently address these issues until the governor and Democrats recognize the true size and scope of the budget problem, which we believe to be a deficit well over $400 million.

“Anything less would be counterproductive and only lead to the need to adjust again a few months from now. Budgeting is all about priorities. Serving the poor, elderly and other vulnerable populations while protecting state taxpayers are our priorities. Our decisions will not occur in a vacuum.

“We cannot forget that we are where we are because Democrats and the governor refused to see the warning signs and repeatedly denied the truth about the severity of Connecticut’s budget issues. There could have been an easier fix if the Democrats simply had conversations with Republicans a year ago. For the past year, Republicans have asked month after month to be included in budget talks. We warned Democrats that the state’s financial problems were worsening. We explained that without significant change our state would continue facing perpetual budget shortfalls. Yet our warnings were ignored, our ideas dismissed, and our offer to help completely rejected. The end result was a one-sided Democrat budget that has completely failed our state.

“We thank the governor for calling for bipartisan conversations. We are sure that if the majority party and governor are committed to real change and forward thinking to bring prosperity to Connecticut, then collectively we can achieve that goal.”