Tagged: State Budget

Malloy Says Reduce Department Budgets

Finally we have an administration that gets how to enact budget reductions, Tuesday’s press release outlines the budget numbers departments have to hit along with the helpful reduction in personnel to get there suggestions. I’ve liked to it below.

With some budgets, labor is the only way to achieve savings. But with others, now it’s time to figure out how to get there. Here’s where forced ranking can help the budget challenged figure out who is essential and not. In forced ranking you start with the most indispensable person/position. In simplistic terms, if you were in the ice cream making businesses the most indispensable person starts with whoever makes the ice cream because without the product, you have no business. Now let’s say you have 5 ice cream makers, who is ranked one? The answer should be the person who can manage themselves most, since if you only had one employee, the ice cream maker, then they would have to do all the rest of the jobs to at least get to a functional level of business.

What isn’t evident from this process is the manager making this list. The sign of a good manager of course, is being able to replace themselves with employees that actually run the business. That should free up the manager for more strategic tasks, like growing the business. Too often managers don’t do that, but that’s another post for another day.

The Connecticut departments that don’t cut management are doomed. I hope someone is paying attention up in Hartford.

Attached, please find Governor Malloy’s proposal to close the $1.6 billion deficit. A few points:

  • These are the recommendations that were sent to the legislature, and if enacted, it will be left to each Commissioner to determine how to achieve the savings outlined. They will have to reduce their agency budgets by the dollar amounts you see, and OPM thinks the number of suggested layoffs will help them get there. Some commissioners might choose to lay off more people to get to that number, some might choose to lay off a lower number — and find additional savings elsewhere.
  • The total proposed number of personnel reductions (6,466) include 1,000 positions which are vacant and will be eliminated, in addition to 5,466 layoffs.

Budget Balancing Plan

 

 

 

 

 

Longevity Bonus For State Workers; Yay Bonds; Nay

Inaction gripping the hearts and minds of Hartford legislators has resulted in the spending two-step. Step one, allow for longevity bonuses to be paid out to state employees. Step two, put off any bond offerings because those financial returns of state bonds have been so exemplary.

But the tax-writing finance committee moved to push that further to make $412.7 million in bond de-authorizations Monday, including 255 individual cancelations and reductions.

“We have not added any new authorizations,” said Sen. Donald DeFronzo, a New Britain Democrat who co-chairs the bonding subcommittee of the finance committee. ”We do not include any authorizations for the UConn medical school.”

Rep. Carlo Leone, a Stamford Democrat who co-chairs the subcommittee with DeFronzo, said lawmakers are responding because of concerns about a “negative outlook” and potential bond downgrade from the Wall Street bond-rating agencies.

“We all recognize that we’re in a tough fiscal environment,” said Rep. Cameron Staples, a New Haven Democrat who co-chairs the finance committee.

With bipartisan support, the bond de-authorization bill was moved to the “consent” calendar for non-controversial items.

Lawmakers also discussed the selling of bonds to refurbish the service plazas along Interstate 95 under an agreement that was reached with the state in November 2009. Under the old contract, the state got 11 cents per gallon from gasoline sales, and now the state is getting one cent, officials said.

What was that last line again? The state is getting less money in the fab deal struck by Governor Rell in selling off, er leasing our service plazas? I’m not the only one asking that question.

State Sen. Andrew McDonald, D-Stamford, said he is concerned with several aspects of the agreement. McDonald noted, for example, that Connecticut has given up a signficant cut of rest area profits.

“It’s a bad deal. There’s no doubt about it,” said McDonald, who is a member of both the Finance and Transportation committees.

But Sen. Toni Boucher, R-Wilton, although in favor of a joint hearing on the contract, said “it seems to me we’re getting a very good deal indeed.”

Boucher, who also sits on the Finance and Transportation committees, argued that is because besides providing food and gas, the partners are also going to be investing $178 million to overhaul the rest stops – an expense that might otherwise have to be footed by a cash-strapped state government.

“We are lucky to have a private investor that will shoulder the cost of this during a difficult time and it will create jobs,” Boucher said. “We should characterize this as a postive, fortuitous opportunity for the state of Connecticut.”

State Sen. Donald DeFronzo, D-New Britain, who co-chairs the Transportation Committee and is a member of the Finance Committee, said he is awaiting a thorough review of the contract being conducted by the state’s non-partisan Office of Fiscal Analysis.

“It’s a very complicated, involved analysis,” DeFronzo said. “But the idea of a hearing is good.”

A hearing might be a good idea before raising some more fees:

Lawmakers also debated over municipal fee increases on a bill that divided chiefly along partisan lines – with Democrats supporting the fee increases and Republicans against. The bill would increase certain notary fees, town clerk fees, marriage licenses, burial and cremation permits, and dog and kennel license fees.

2010 Annual Report on Connecticut Not Following GAAP

Each year I bemoan the voodoo budget the state legislature manages to formulate out of fantasy numbers. This year, sadly, the same. The legislature must adopt GAAP. Connecticut is still using a modified cash accounting system which allows the legislature to “balance” its budget while actually spending beyond its means. The chief trick? Recognizing revenue prematurely. Even with the huge deficits we see today, there are still expenses put off to future that shouldn’t be.

Since 2007, when State Comptroller Nancy Wyman made a play to get the Governor and the Legislature to adopt GAAP, Wyman has been quiet on the subject. Yet, buried within her monthly press releases about the state of the budget, are gems like this:

Wyman said she is also concerned that $473 million in expected state agency savings built into the 2010 budget might be overly ambitious because the budget does not specify how those savings are to be achieved.

“The policy changes required to produce that level of savings are, for the most part, not addressed,” in the budget, Wyman said.

Wyman was of course discussing the loss of payroll jobs in the state, 70,000 between August 2008 and August 2009, and how that would affect the revenue of sales and income tax collections looking ahead. Her latest comments:

Wyman said receipts of the income tax remain weak, despite an increase in the tax rate for upper-income residents. Collection of the quarterly estimated income tax payments typically made by investors is down by nearly 29.4 percent, Wyman said, and revenue from the payroll-withholding tax dropped by 4.3 percent.

The state added 1,000 payroll jobs in October, Wyman said, but still has lost more than 70,000 jobs since October 2008.

“The extra revenue associated with the higher tax rate is being offset by a continued drop in overall receipts of the income tax,” Wyman said.

Wyman said the income tax was originally projected to produce about $6.6 billion by the end of the fiscal year on June 30, but is now expected to bring in about $6.4 billion.

The sales tax is now targeted to produce about $3.1 billion in revenue, or about $27 million less than budgeted.

Does Chris Donovan or Don Williams even read the Comptroller’s reports? Guessing by the reaction to Larry Cafero and Stweart McKinley’s bipartisan budget solving request letter, the answer would be no.