Connecticut has momentum; let’s not lose it

By Senate Republican Leaders Len Fasano & Kevin Witkos

The state Capitol is buzzing with new proposals to tax Connecticut residents. But before Democrat lawmakers get ahead of themselves with new taxes, we are urging all legislators to consider what policies have worked for our state and which have not.

While Connecticut endured years of massive tax increases that only led to bigger budget deficits, today’s budget numbers look very different.

The General Assembly’s 2018-2019 bipartisan budget has resulted in significant surpluses, economic growth and a historic amount of money in our rainy day fund.

Connecticut still has significant challenges on the horizon, and the legislature should not squander the opportunity to learn from what has worked, and use that as a base for continued efforts to improve our state.

Where are we now? 

The latest numbers from the nonpartisan Office of Fiscal Analysis anticipate a budget surplus of $487 million in the General Fund, a surplus of almost $70 million in the Special Transportation Fund, and a deposit of over $1 billion into the state’s budget reserve fund – growing our rainy day pot to over $2 billion.

How does this compare to past years?

The bipartisan budget singlehandedly built up the state’s savings from practically nothing. Connecticut closed its 2017 books with a disappointing $213 million in our rainy day fund, a small amount for a state our size. But that was typical of the previous governor’s administration which averaged less than $300 million in the reserve fund prior to the bipartisan budget. In fact, Connecticut hasn’t had anywhere near $1 billion in the rainy day fund since 2009, but now we are on pace to exceed $2 billion this year and approach $3 billion by fiscal year 2022.

Also in recent years under the Malloy administration, one-party-created budgets repeatedly underperformed projections, creating budget deficits that required last minute painful cuts just to balance.

This year, that pattern ended. We are not facing last minute cuts. We are actually seeing numbers exceed growth expectations. At the same time our rainy day fund is surging.

Why the change? 

The bipartisan budget included historic reforms that are starting to shift the direction of our state and rebuild people’s confidence in Connecticut. This includes:

1. A real spending cap. Connecticut finally has implemented a cap, first approved by voters over 25 years ago, to spend no more than we can afford.
2. Borrowing caps. Under one party rule led by Governor Malloy’s administration, Connecticut’s bonded indebtedness increased by $6 billion, skyrocketing fixed costs and making it more difficult to fund core services. The bipartisan budget, for the first time ever, put limits on what the state can put on its credit card to reduce debt.
3. A volatility cap. Connecticut has a history of using temporary increases in revenue to spend over and above what our state truly can afford. The bipartisan budget stops this practice by directing volatile revenue streams to our rainy day fund.
4. Tax cuts for seniors and retirees. By eliminating taxes on pensions and social security income for more seniors, Connecticut is keeping more money in people’s pockets and creating incentive for people to stay here.
5. A transportation funding mechanism. The bipartisan budget included a historic amount of funding for transportation, thanks to its inclusion of a portion of the Republican Prioritize Progress plan to reprioritize investments in transportation without tolls or new taxes. The budget also fully funded the state’s Special Transportation Fund creating five years of projected surpluses. This commitment speaks volumes to job creators and residents who want to see Connecticut improve transportation. We need to continue this trend over the long term, and fully implementing Prioritize Progress offers a clear path to fulfill a bipartisan vision for dramatically better transit.
6. Reductions to future deficits. While future deficits still exist and our work is far from done, the bipartisan budget did reduce projected deficits by hundreds of millions of dollars. We need to continue promoting economic growth that can reduce those deficits even further. We have to build people’s confidence in Connecticut to promote growth.

As lawmakers look ahead to more challenges, we need to understand what has worked and what has not.

Under one-party Democrat rule, dramatically increasing taxes led to decline and deficit.

Under a bipartisan budget, the strategy of keeping more money in people’s pockets led to growth and surplus.

Exchanging ideas produced a successful budget and set a new course for our state. Let’s not lose that momentum.