Gov. Malloy Calls For Shared Sacrifices

In his first budget address, Gov. Dannel P. Malloy touched upon several areas of the proposed state budget for the next two fiscal years, from local and state education and municipal funding to state employee concessions and increased taxes.

Faced with filling a projected $3.2 billion deficit in the coming year, Malloy’s proposal calls for a number of “shared sacrifices,” but protects local services. It includes $1.76 billion in spending reductions, coupled with $1.51 billion in estimated increases in income – sales and other taxes in the first year of the budget.

For a more detailed breakdown view the actual budget here.

'More money people don't have'

Haircuts are among the new goods and services that would be subject to a state sales tax under Malloy’s proposal. For hairdresser Nancy Peterson at Headlines salon on Route 12 in Gales Ferry, that news was distressingly familiar.

Peterson, who has been a hairdresser for 45 years, recently moved to the area from California, her home state. “In California, they lost all their industry because the taxes were so high,” she said. “Everyone moved out.”

Peterson said the new tax means “just a little more money that people will have to put out that they don’t have.” But she expects they will do just that. “People still need haircuts,” she said.

Malloy’s recommended budget has a bottom line total of $17.94 billion for the 2011-12 fiscal year, and $18.37 billion in fiscal year 2012-13. Among his proposals are numerous spending cuts and tax increases, the consolidation of about 30 percent of state agencies, and changes in the state’s revenue structure to eliminate borrowing to meet operating expenses.

The governor's budget also calls for the restoration of $270 million over the next two years to the Education Cost Sharing grant to cities and towns to make up for the anticipated loss of federal stimulus money at the end of June. That funding is currently plugging about a 14 percent hole in ECS grants to local municipalities.

Malloy’s proposal also relies on about $2 billion in savings and reductions over the next two years - $1 billion each year - from unionized state employees who are already under contract, according to Office of Policy and Management Secretary Benjamin Barnes.

Here are some highlights from the governor's address:

• State employees must agreed to various concessions or risk the chance of mass layoffs;
• The enactment of an earned income tax credit of 30 percent for working citizens;
• A new incentive for the first five companies "that bring hundreds of new jobs" to the state;
• The consolidation of state agencies by 30 percent;
• The institution of various new taxes and an increase in the sales and, for some, income taxes;
• Maintain municipal grant funding from the state;
• Fill the gap that will be left in state ECS funding when the federal ARRA grant expires in June;
• Provide money for more magnet schools and begin to transfer control of vocational-technical schools from the state to local school districts;
• Convert Medicaid programs to a self-insured model; and
• Improve the state transporation infrastructure.