The Legislature of Too Little, Too Late

January 16, 2009

What the General Assembly Did and Didn’t Accomplish Wednesday
And How to Address the Immense Challenge that Lies Ahead

On Wednesday the Connecticut General Assembly again convened for the purpose of closing the state’s $356 million budget deficit, and again adjourned leaving the job unfinished. The mitigation plan passed by the legislature, but opposed by all 49 Republicans, resulted in only $120 million in savings to the General Fund and included new spending for a controversial Democrat-backed program that has never even received a public hearing.

That’s right – the General Assembly got together in order to cut spending and close the budget deficit and instead passed a bill that included new spending and left the deficit largely intact. And all this happened despite Senate President Don Williams’ promise in January that “any proposal that costs money, that doesn’t pay for itself, is almost assuredly dead on arrival.”

For her part, Governor Rell will reluctantly sign the mitigation plan into law, because she knows it is the most she can get out of the legislature at this time. But Governor Rell also acknowledged that the Democrats “didn’t make as many cuts as we needed” and “cannot continue to be the legislature of too little, too late” if we are to overcome our budget crisis, put people back to work and get our economy moving again.

Governor Rell is right. This is the biggest fiscal crisis of our lifetimes and it is getting bigger everyday. This week deficit projections will be revised to account for the quarterly estimated income taxes investors’ were obligated to pay by January 15th. It is expected that a massive shortfall in this revenue stream will cause the current budget deficit to grow as much as $800 million to $1 billion, and legislators will have only until June 30th to close that gap. What’s worse is that this revenue shortfall will likely result in an $8 billion to $10 billion deficit over the next two years. Incremental steps are not going to solve a budget crisis of this magnitude. The legislature must act swiftly and boldly to fundamentally reinvent state government by consolidating government agencies; finding more efficient and cost-effective ways to provide social services; and vastly reducing the scope and size of state government. So far, Democrat leaders have demonstrated that they are unwilling to take even modest steps in that direction.

Let’s go back to Wednesday. Knowing that the Democrat’s proposed mitigation plan would not close the entire $356 million deficit, Republicans offered a series of amendments designed to achieve additional savings.

Our first amendment, which was defeated along party lines, would have eliminated a brand new $274,000 spending appropriation that was buried in the Democrat proposal, because we believe, as Senator Williams said in January, that new spending proposals introduced in this economic climate should be dead on arrival.

The appropriation was designed to supplement existing state contracts with private custodial service companies, so they could in turn increase the value of the healthcare benefits they provide their union employees. As if it isn’t appalling enough that Democrat leaders would introduce new spending proposals as part of a plan designed to close a growing budget deficit, consider the dangerous precedent this has established.

When companies bid on state contracts, they are supposed to anticipate all costs associated with providing their respective services. For example, the contract for capital grounds custodians/maintenance was put out to bid in 2006. The winning bid, submitted by Guardian Service Industries, totaled $2,506,000, with CSI International bidding $2,650,661.60. It is not fair to CSI, who may have properly anticipated their healthcare costs, to lose the contract to a company that underestimated its costs, but was later able to secure a government bailout to increase the value of their contract. This practice violates the spirit of our clean contracting laws. If a company cannot meet its obligations, the contract should be immediately voided and put back out to bid.

Another amendment introduced in the Senate, and defeated largely along party lines, would have returned the $2.9 million in the State’s Contingency Needs Account back to the General Fund. This account was established as part of the budget agreement between Governor Rell and legislative Democrats in 2007. Under the agreement, Governor Rell, the Speaker of the House and the Senate President were each allotted $2 million for both FY 08 and FY 09. Former House Speaker Jim Amann spent all of his money. Governor Rell has spent none of her FY 09 allotment. And Senate President Williams has approximately $900,000 remaining in his account.

In times of surplus, this account can be an efficient way for the Governor and legislative leaders to help bolster operating funds or make capital improvements for community groups or organizations that are in pursuit of the public good. In fact, the money former Senator Rob Russo secured to help fund an audit of the Bridgeport Board of Education came out of this account. But, in the face of our growing budget deficit, it is plain common sense that these “slush funds” should be closed. To her credit, Governor Rell has promised not to spend her $2 million allotment in FY 09 and she has twice proposed that Senator Williams make the same commitment. He refuses to do so.

Republican attempts to implement a furlough (unpaid leave) plan requiring all non-union state employees to take one unpaid day off in January and two days off per month from February through June – a measure that would have saved $17 million – was also defeated. As was our proposal to require all members of the General Assembly, constitutional officers, state agency commissioners and executive directors of boards and commissions to take a 10% salary reduction in the current fiscal year as well as in the upcoming biennium. The amendment also eliminated legislators’ transportation allowances, travel reimbursements and unsolicited mailing privileges. Not only would this proposal have achieved real savings, to the tune of $5.3 million annually, but it would have demonstrated that the legislature is ready to lead by example and finally join families across our state who have been forced to do more with less in order to cope with the economic recession.

Ever since offering our own balanced budget proposal last spring, Republican leaders have warned that the longer we wait to address our budget crisis, the bigger our deficit gets and the more limited our options for dealing with it become. And that simple logic remains true today.

I continue to believe that a broad based tax increase or tapping our state’s Rainy Day Fund too early will result in economic ruin over the coming two years. I also believe it is irresponsible to depend too heavily on a federal stimulus plan that has yet to be written. Regrettably, the Democrats’ inaction to this point is an indication that those are the avenues they will pursue. This is the wrong approach and I intend to fight it every step of the way.

Facing a growing budget deficit of his own, New York’s Democratic Governor, David A. Paterson recently said, “Raiding our $1.2 billion in rainy day reserves sounds logical, but doing so would provide only a fraction of the funds we need, does nothing to address next year’s record deficits, threatens our State’s good credit rating, and leaves us with no options to meet year-end expenses if the downturn is worse than expected. Delaying action in hopes of help from Washington sounds sensible, but doing so sends a message to our nation’s leaders that we aren’t willing to solve our own problems. Raising taxes in special session sounds easy, but ignores the fact that overspending is at the root of our problem.” I couldn’t agree more with Governor Paterson’s assessment of the consequences of trying to solve a long-term problem with short-term solutions.

Our failure to take meaningful action to stem this economic downturn can be counted in record job losses, foreclosures and business closings. We need to fundamentally reinvent state government in order to save Connecticut. To face our current economic crisis, we need a government that is leaner, more accessible to the public, and more accountable to taxpayers. We need to leverage technology and learn from successful businesses and other states that have found ways to streamline government and make it more efficient. We need a 21st Century Government in order to face 21st Century Challenges.