Weathering the Economic Storm [Commentary]

November 6, 2008

The federal government’s political decision of a sweeping billion dollar bailout is slowly but surely being doled out to businesses and families across the country. The effect of that bailout is still undetermined. The financial forecasts for many remain bleak; a daily rollercoaster ride on Wall Street, hundreds of homes in foreclosure, and our own state budget which is in dire straits.

As of October 1, the state of Connecticut has a predicted a $300 million dollar budget deficit. This projection was made during one of the most tumultuous times our financial markets have seen. Although the markets have rallied in recent days, we may not know the true effects of this economic volatility for some time. And when that dust settles, that $300 million dollar deficit here in Connecticut could quickly balloon to as much as $600 or $700 million dollars and maybe even $1 billion by the end of our first year. What’s more, that number is expected to grow to more than $2 billion dollars over the next two fiscal years. This is clearly the worst economic time ever faced by the State of Connecticut.

Governor Rell has already stepped in and made nearly $200 million dollars in difficult rescissions and presented a comprehensive deficit mitigation plan which the General Assembly should act on immediately. Legislative Republicans have also highlighted a number of areas where we can reduce spending at the state level, including holding off on unnecessary repair work at the Legislative Office Building and reevaluating the purchase of excess equipment like beepers and computers. But unfortunately, these are really only small cuts which would have only a small effect upon a $1 billion deficit.

Municipalities must brace for a legislature which, at this point, has no clear answers to the deficit problems. No doubt, you know a family struggling to pay the mortgage, the insurance, the grocery bill. Just as that family struggles to stretch and save every dollar, every city and town must immediately make adjustments to their budget. As difficult as this belt-tightening may be, each municipality in Connecticut must realize it will be unable to count on the state for much of its financial support as the full impact of this crisis unfolds. And, to avoid property tax increases and blame it on the State, every municipality must put their own mitigation plan into effect.

Although this work is never easy, there are efforts already being made by a number of proactive local communities. In Bridgeport, our state’s biggest city, Mayor Bill Finch announced layoffs of dozens of city employees, including several police officers. In September, New Haven Mayor John DeStefano announced a round of layoffs to help close a $6 million dollar budget gap. And in the Town of Darien, First Selectwoman Evonne Klein says the city has stopped major capital projects and the town won’t be creating any new positions for the foreseeable future. I hope fiscally responsible measures like these are an inspiration and example for the rest of the state’s local governments. Each municipality and town is different and, therefore, there is no silver bullet for every municipality or town. However, what is clear, absent any measure taken now, the end result may mean local residents will undoubtedly face a property tax increase which we all cannot afford.

In recent weeks, some legislative Democrats have suggested the quick-fix notion of tapping into our state’s rainy day fun. This is not the answer. There simply isn’t enough money in that fund to cover the $2 billion dollar deficit projected for the next two fiscal years. Furthermore, dipping into this fund would almost guarantee a tax increase for the next two years and ultimately downgrade our bond rating.

This is, instead, a time for tough choices and creative solutions. Cities and towns alike must learn to do more with less. I am urging local officials from both sides of the aisle to come together, sit down, and hammer out solutions to the financial difficulties facing us all.