November 21, 2014

Budget Update from Connecticut Association of Nonprofits, November 14, 2014

Governor Malloy Orders Emergency Budget Cuts, Restricts State Hiring to Combat SFY15 Deficit

In response to the looming $60 million revenue shortfall and $80 million budget ‘deficiencies’ or cost over-runs among stateagencies, Governor Malloy ordered emergency spending cuts
effective immediately. A memo from OPM reinforced the urgency of the matter in regard to state employee overtime work, new [state employee] hiring, and potential rescissions, or across-the-board spending cuts.

The administration has also put state contracting on hold, barring agencies from entering into new contracts and from extending or adding funds to existing contracts. In addition to executive branch agencies, OPM is requesting that higher education units, constitutional offices, and judicial and legislative branch agencies implement similar measures.

Last month, Secretary Barnes projected that the state would end the year with a $300,000 surplus. The figure was certified by state Comptroller Kevin Lembo on Nov. 1, but that was before the November consensus revenue estimates were released showing that federal grants, the gas tax, and gambling revenues were lagging behind the state’s projections.

As you may recall, Governor Malloy issued similar cuts two years ago this month to offset an even larger budget deficit. As a reminder, existing law gives the Governor statutory authority to rescind [cut] up to 5% of any line item and 3% of any fund without seeking legislative changes to the state budget. Note:Municipal aid, debt service, and state employee salaries and benefits are excluded from rescissions.

We will continue to monitor the Administration’s response and will provide the latest updates.

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