Time Running Out to Get Serious about the State’s Budget Deficit

March 5, 2009

In early February, Legislative Republicans put forth a series of proposals designed to reduce our state’s current budget deficit by more than $925 million through spending cuts, agency consolidations and other cost saving measures. We shared our proposal with Democrat leaders and requested that we work together to identify additional savings to balance the projected $1.35 billion deficit, while protecting at least $1.1 billion of the state’s $1.4 billion rainy day fund to help stave off future tax increases.

Regrettably, the deficit mitigation bill that passed the General Assembly last week (HB6602) fails to accomplish those goals. Faced with a $1.35 billion deficit, the bill only realizes $134 million in spending cuts. Moreover, the bill simply cannot guarantee, nor will it produce, the $1.2 billion in savings it promises and that the state desperately needs. That is why I joined my Senate Republican colleagues in voting “no.”
Rainy Day Fund at Risk
Rainy Day Fund at Risk [pdf]

Chief among our concerns was a $220 million line-item for unspecified sweeps from “so called” off-budget accounts. Remarkably, the bill failed to identify even $1 to be cut from these accounts: that’s right, not even $1! Instead, the bill only established a process whereby a committee would report back to the legislature its recommendations for the $220 million in savings and the legislature would then have to vote on those recommendations prior to the end of our fiscal year on June 30th. While it is certainly prudent to comb these accounts for any and all potential savings, it is highly unlikely they will produce the $220 million the legislature is looking for. Indeed, Governor Rell shares this concern, because her administration and the legislature have already swept more than $34 million from these accounts, many of which are restricted to certain uses and off-limits for further sweeps. More importantly, why are we spending more time studying the problem when we need to act on it? Our failure to act and to find all of the promised savings, will likely result in the rainy day fund being tapped yet again to make up the difference.

The mitigation bill also claims savings of $22 million from a retirement incentive program (RIP) for state employees requested by the Governor and Legislative Republicans; however, the bill purposely excludes the legislative language necessary to implement the program. In an unfortunate show of partisanship, the Democrats then defeated a Republican amendment (LCO 4246) to add the implementation language; proof that the $22 million line-item was not a sincere proposal and the savings will never be realized by the State of Connecticut.

Finally, the plan assumes an additional $49.2 million in union concessions, despite the fact that union negotiators have yet to agree to any concessions; $5 million in additional contract cancellations by the Governor that she cautioned us she did not believe can be realized; and $3.8 million by expanding the bottle bill to water bottles starting April 1st. It is highly questionable whether any of these measures will deliver the promised savings in the next four months.

All told, the mitigation bill leaves more than $700 million of the state’s rainy day fund vulnerable to a raid when the fiscal year ends June 30th. As Republicans, we have been warning for months, if the legislature uses that much of the rainy day fund to balance the current year’s deficit, then it should be seen as an admission that Democrats intend to implement broad-based tax increases to balance the $6 – $8 billion deficit projected for FY10 and FY11.

To help avoid this outcome, Senate Republicans have proposed more than $100 million in additional cost-saving measures, which include mandatory furloughs for union and non-union state employees, the elimination of legislative slush funds, and a 10% pay cut in legislator’s salaries. These proposals were also defeated along party lines.

In the end, the Senate Republican Caucus decided that it could not, in good conscience, support a bill that purports to do something it will not. This bill will not generate $1.2 billion in savings and it will not conserve enough of the rainy day fund to stave off tax increases in FY10 and FY11.

I understand the arguments of some Republican colleagues who voted for the bill despite its shortcomings – after all, Republican input helped protect $8 million in special education funding and $7 million for local bridge repairs. And I understand that Governor Rell will sign this bill into law. She has to. It is all the legislature is giving her at this time.

But, half-measures and incremental steps are not going to solve a problem of this magnitude. That is the message I chose to send with my “no” vote. To overcome our budget crisis, state government needs to work in a truly bipartisan way and make the difficult decisions necessary to reduce the size and cost of government. I continue to believe that a broad based tax increase or draining our state’s rainy day fund too early are the wrong options and will only result in further job losses, foreclosures and business closings. Regrettably, time is short before these will be our only options.