Malloy offers Lamont ‘transition budget’ that could mean no tax increase

Gov. Dannel Malloy has issued what his office is calling a “transition budget” to Gov.-elect Ned Lamont, which includes canceling some scheduled tax cuts; reassigning some teacher pension costs to municipalities; reducing the number of government employees through attrition; and cutting health care programs and financial aid to municipalities.

“These options would be difficult, and would involve real sacrifice by various constituencies,” Office of Policy and Management Secretary Ben Barnes wrote to Lamont. “The Malloy administration did not repeatedly put hard choices like these on the table without significant forethought, knowing that many in the legislature may have preferred to take a different approach including more revenue. But if the General Assembly is willing to work with you on a combination of such ideas, closing the (fiscal year) 2020 shortfall without a tax rate increase is achievable.”

Lamont is inheriting an estimated budget deficit of $1.73 billion for fiscal 2020, with spending at $200 million over the constitutional spending cap. The deficit is expected to grow to $2.37 billion in fiscal ”™21.

The transition budget also encourages Lamont to consider installing electronic highway tolls, legalize and tax recreational marijuana, and impose a fee on legalized sports betting. In a Business Journal interview before the election, Lamont indicated that he would examine the revenue potential of all three.

“Governor Malloy is required by statute to prepare this tentative budget,” Lamont noted in a statement, “and I appreciate the work that went into preparing it and all of the work his team has done to ensure a smooth transition. My team and I will review it as we prepare a new, balanced budget that prioritizes economic growth.”