Gov. Dannel P. Malloy is making $102.8 million in preemptive cuts to the current fiscal year’s budget, citing concerns and uncertainty about recent stock market volatility.
Malloy’s budget chief, Office of Policy and Management Secretary Benjamin Barnes, said in a statement Friday that his agency has reduced its expectations for capital gains in fiscal year 2016, which began July 1.
“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.”
He said the cuts will give the state more flexibility, should market conditions improve.
Most of the cuts, $99.2 million, will come from Executive Branch agencies.
The state’s social service agencies will bear the brunt of the cuts.
The Department of Social Services, the Department of Mental Health and Addiction Services, and the Department of Developmental Services will see rescissions of $64 million, $8.4 million and $7.6 million, respectively.
Nearly all of the $64 million cut at DDS is to the Medicaid program. According to the Office of Fiscal Analysis, the Medicaid cut, combined with the loss of corresponding federal matching funds, will cost hospitals a total of $192 million.
Municipal governments will also share in a $15 million reduction.
Speaker of the House Brendan Sharkey, D-Hamden, released the following statement Friday decrying the cuts:
“I’m disappointed and certainly opposed to what appear to be cuts targeting some of the very areas we sought to protect in the budget. Under our budget agreement, the bipartisan MORE Commission was charged with identifying additional municipal savings, and they haven’t been given the opportunity to do so yet. We also agreed to restore hospital funding the governor proposed to cut, and so these renewed cuts will very likely impact the delivery of healthcare services. Though the governor has the authority to make these cuts at this time, the legislature will continue to monitor the status of the budget, and look to mitigate these cuts next session.”
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