Budget Passed, Deficit Remains,Legislature’s Work far from Finished

October 15, 2009

On October 2nd, the Connecticut General Assembly passed a series of bills to implement the state budget for the 2010 and 2011 fiscal years. The final vote in the Senate was met with self-congratulatory applause from Democrat leaders who passed the two-year $37.6 billion budget without a Republican vote and without Governor Rell’s signature. Their celebration ensued despite the fact that the legislature completed its work three months late (the state has been operating without a budget since the fiscal year began July 1st) and despite the fact that State Comptroller Nancy Wyman had warned just one day earlier that the budget already appears to be $500 million – $1 billion in deficit. Only in Hartford can passage of such a bill be considered a success.

In reality, the FY10-11 budget battle is far from over because our deficit remains intact. As Comptroller Wyman, a Democrat, said in her October 1st letter to legislative leaders, even after fully incorporating the projected revenue gains enacted as part of the budget, the revenue shortfall in the General Fund would exceed half a billion dollars.”

Ms. Wyman also said she is concerned about the state’s ability to realize an additional $473.3 million in “unspecified savings” because, as she wrote, “the policy changes required to produce that level of savings are, for the most part, not addressed.”

I share the comptroller’s concerns, as do most of my Republican colleagues and leading economists from across Connecticut. The legislature’s revenue projections are unrealistically optimistic and the implementer bills, which passed largely along party lines, will not generate enough savings to keep pace with the Democrats’ voracious spending levels.

In many ways, we are right back to square one. The economic recovery has been sluggish, state income and sales tax revenues are down, and Democrats still refuse to cut spending in the face of an anticipated $500 million – $1 billion deficit.

Let’s hope Democrats don’t repeat the mistakes of the past when they refused to join Governor Rell in her efforts to eliminate the $1.35 billion FY09 deficit by reducing spending and consolidating state agencies. The legislature’s failure to stem the budget crisis in its infancy has since been counted in record job losses, foreclosures and business closings. This time, it must be different.

On November 1st, the comptroller will revise her fiscal projections. If, as expected, the deficit is greater than 1% of total General Fund appropriations, Governor Rell will be required to present a deficit mitigation plan for action by the legislature. When that happens, the people of Connecticut need their elected officials to finally lead by making the difficult decisions necessary to get us out of this fiscal crisis. That means creating a government that is leaner and more accountable to taxpayers; and creating a business climate that welcomes entrepreneurship and fosters job growth. Moreover, we must meet this challenge with a greater sense of urgency. As we learned this past year; the longer we wait, the greater our deficit gets, and the more limited our options become.