Malloy cuts $102M from budget

Gov. Dannel P. Malloy is cutting more than $102 million from the budget in an effort to keep it balanced. The state”™s Office of Policy and Management released a list of budget recessions.

According to officials, due to recent volatility on Wall Street and uncertainty about the future, Malloy is taking these strategic steps so, long term, state revenues can support levels of spending.

Ben Barnes, secretary of the Office of Policy and Management, said the estimate of capital gains has decreased for the current fiscal year.

“It would be reckless to expect these revenues to grow when the S&P 500 is down more than 6 percent since May,” Barnes said. “Only once since 1994 have we seen positive capital gains revenue growth when the market was down. Conversely, five times in the last 20 years a down market has led to significant revenue drops.”

Barnes said government officials are planning ahead. By acting now, the state will have more flexibility if market conditions improve and will avoid deeper cuts if the market contracts, according to state officials.

The rescissions for executive branch agencies, which the governor makes, total $99.2 million. Legislative leaders and the judicial branch have been asked to reduce spending by $420,000 and $3.1 million respectfully. That amounts to 0.5 percent of their respective appropriations.

The Governor has statutory authority to rescind up to 5 percent of any line item and 3 percent of any fund without seeking legislative changes to the state budget.

In addition, the policy and management office has identified nearly $15 million in municipal aid reductions. These reductions are part of $20 million in reductions mandated by a house bill and are part of the adopted budget. The reductions also reflect an effort by the Municipal Opportunities and Regional Efficiencies Commission to create incentives for multi-municipal cooperation that will bring overall government savings. Overall, municipal aid continues to see an increase of 11.4 percent in the 2016 budget over the 2011 budget.