Closed Door Budget Agreement Will Create Larger Fiscal Problems

October 10, 2009

It took 237 days and a Special Session for the Connecticut General Assembly to pass a new two-year state budget, but the majority party who crafted the fiscal document (behind closed doors) gave rank and file members of the legislature less than a day to read the $37.6 billion, 730 page bill. Considering it is the most important piece of legislation of the next two years, giving members ample time to read and have input to the budget would seem like the responsible thing to do. In many ways this sums up what is going on at the State Capitol these days.

When the General Assembly convened back in January, the overwhelming sentiment was that a true bi-partisan effort was going to be needed to rectify the state’s record budget deficit. The good will was short lived however. Spurred on by the national recession, Connecticut was facing a shortfall in the area of between $6 and $9 billion. The politicization over the actual size of the budget deficit became a major obstacle that lasted throughout the entire legislative session. What everyone did know was that the state’s budget shortfall was substantial and while attention could have been given to finding ways to reduce it, leaders seemed to be more interested in debating its size.

Many families and businesses in our state continue to feel the effects of the economic downturn and are being forced to make some very difficult decisions. Gov. M. Jodi Rell stressed this point in her budget address in February. She said that tough decisions and sacrifices needed to be made, some of them painful, in order to reduce state spending that has nearly DOUBLED over the past 15 years.

The fastest area of growth over the past decade and a half has been in the area of personnel. State employee costs account for approximately 30% of the state budget. More state funding goes to the over 50,000 state workers than any other item in the budget. In April, the State Employees Bargaining Agent Coalition (SEBAC) agreed to approximately $700 million in concessions with the state, including early retirement and wage freeze provisions. In exchange, it guaranteed that all state employees would be shielded from layoffs for two years.

While I certainly applaud the state employee union for making these concessions, the no layoff provision handcuffed the legislature from reducing costs further. It also took away any opportunity we may have had to reform or at least restructure state government for the next two years. If there was ever a time to begin streamlining our state government to reduce waste and make it more efficient, now would certainly seem like the time.

Some have indicated that economic conditions will change in the near future, but even if they do my concern is that the budget passed on September 1st cannot be sustained. Why this concern? A closer look at what passed indicates that despite reports by some that the state cut spending, the budget actually INCREASES spending by $560 million over the next two years. State taxpayers will be responsible for over $1 billion in new taxes, including a 10% surcharge on the profits of some of our state’s larger employers. In addition, the state hopes to bring in nearly $120 million in fee increases. All license fees, from teachers and day care providers to hunters and fishers, will increase. So while families and businesses are doing what they can to cut costs, the state is doing nothing except making it harder for them to make ends meet.

What’s most glaring about this budget is the fact that it borrows approximately $3.7 billion, which includes nearly $1 billion to close out FY 2009, and drains the state’s Rainy Day fund. Because of this, it is already being projected that the state will be facing a $3 billion shortfall in 2012. Thus, even if the economy does improve, the state will be starting off in a hole, certainly not what I would consider responsible budgeting.

There are some who believe that passing this budget was better than not passing one at all. However, by placing an even greater burden taxpayers and businesses, this budget will create larger fiscal problems down the road. Maybe at that point we can get serious about making the tough decisions that go into reducing costs to the state.