Legislature’s nonpartisan Office of Fiscal Analysis shows the State is in Serious Financial Trouble

November 25, 2013

Hartford, CT – State Senator Toni Boucher (R-Wilton) member of the Finance Revenue and Bonding Committee released the following statement today re: Fiscal Accountability Reports from the Office of Fiscal Analysis (OFA) and the Office of Policy and Management (OPM).

“The legislature’s non-partisan Office of Fiscal Analysis (OFA) reported a $2.3 billion deficit over the two year period following Governor Malloy’s four year term in office (FY16, FY17). Essentially, the administration is leaving the next Governor or himself (if he is re-elected) in serious financial trouble.”

“While OFA projects a modest surplus of $8.4 million in FY15, OFA is also reporting that the budget is projected to exceed the state spending cap in each fiscal year for the foreseeable future. The cap was put in place at the time that the state income tax was first instituted to protect the taxpayer from out of control spending by lawmakers in Hartford. The Governor doesn’t appear to take that measure seriously.

“The governor’s partisan Office of Policy and Management (OPM) is reporting a $35.1 million surplus in FY15 and a $1.04 billion deficit over the two year period following Governor Malloy’s four year term in office (FY16, FY17).”

“The discrepancies between OFA’s and OPM’s numbers are largely due to a new accounting method used by the administration. For the first time since Governor Malloy was elected and possibly the first time ever current services estimates are being used in their calculations. This is an accounting maneuver plain and simple. In reality, the state is nowhere near structural balance.

“In relying on one-time stop gaps of $1.1 billion to balance the budget a $2.3 billion deficit will still need to be addressed. It seems that tax increases have become the standard response to rolling deficits by the administration.

“Budgets that are based on high taxes and unfounded assumptions are driving up costs, damaging the state’s credit rating and forcing people out of the state. The Governor’s own budget office’s Fiscal Accountability Report last year warned against additional tax increases. The report stated that “extraordinarily difficult decisions to reduce spending will be necessary. It appears that there is no such commitment in this year’s report or the will to make the tough budget decisions.

More Trouble Ahead-

“Debt service as a percent of General Fund expenditures will reach an all-time high in upcoming fiscal years. While the state usually spends 8-8.5% of its budget for debt service payments, the next biennium calls for 12% allocation. Extending debt, bonding operating expenses, enacting tax amnesty programs and $750 million from one-time revenues sources do not constitute structurally sound budget strategies.

“Irresponsible budget actions have people reading the tea leaves and quicken the pace of people and jobs leaving Connecticut. A number of businesses have closed believing that it is easier to move out than to continuing to do business in such a high cost state. We need solutions that have support from both sides of the aisle to reverse this downward spiral.

“The latest email I received from an angry constituent describes how many are feeling: In the last 20 years the state has really gone from being a great place to live to a disaster. The attached WSJ article shows just how bad things are. Forbes had a similarly damning article in August. The state was still in recession in 2012, the budget deficit is still astronomical after a $1.8 billion tax hike, the state pension fund is less than 50% funded and the debt per capital is among the highest in the US. This is not sustainable, and it is no wonder the state has been losing population. Until the state adopts some sensible policies regarding spending and pensions, there will be little to look forward to.

“I couldn’t agree more, legislators from both sides of the aisle, from cities with double digit unemployment and suburbs that are shouldering large tax burdens, must come together and find a way to adopt sensible polices than can revive economic growth and give residents a more positive outlook.”