New Budget Pushes Tough Decisions Off for Another Day

October 2, 2009

The state of Connecticut finally has a new budget! Unfortunately that is where the good news ends. In the early morning hours of September 1st, the legislature approved the $37.6 billion two-year budget in a manner that left many scratching their heads and something that I could not support.

With Connecticut’s economy struggling to gain momentum, everyone was aware of the challenges facing the state heading into 2009. In her State of the State address back in January, Gov. M. Jodi Rell warned us that balancing the state budget would be not be easy and that difficult choices would have to be made, much like the decisions many families have had to make during this recession.

The budget was the most important responsibility of the legislature this year, yet the urgency and the importance to pass a true bi-partisan compromise seemed to be lacking throughout the entire process. More focus was placed on determining and politicizing the actual size of the budget deficit than making efforts to reduce it. When the session ended in June without a budget, the feeling was that everyone would put aside their differences in Special Session where the legislature and the governor’s office could concentrate solely on reaching an agreement. This did not happen.

Instead, it was more of the same. While budget negotiations did take place sporadically throughout the summer, they did so out of the public eye between a small group of legislative leaders and the executive branch. There were no public hearings, and very little media coverage since a news blackout was out in place for several weeks.

When the majority party announced they had an agreement, legislators were called back to the capitol to vote on the plan the next day even though there was no bill available for anyone to review. It wasn’t until the day of the vote that anyone was able to read the state budget. Think about that, the most important measure of the next two years and rank and file members were presented a 700-plus page bill just hours before the vote. That’s not a responsible approach in my view.

They say the devil is in the details and this budget holds true to that saying. In fact, with revenues well below what had been budgeted in prior years, the state still increased spending under this budget by nearly $560 million over the next two years. While families and businesses are doing everything to reduce costs to make ends meet the state is doing the exact opposite by increasing expenditures. The budget does nothing to restructure or even reduce the size of state government while little effort was made to eliminate waste.

What the budget does do is implement over $1 billion in new taxes, including a 10% surcharge on corporate profits for certain larger companies. At a time when we should be doing everything to help businesses create jobs and turn a profit, this budget essentially penalizes them for doing so.

The measure also threatens to disrupt the state’s most stable source of income by increasing the income tax the state’s wealthier residents. Some may see this as a tax that does not affect them, however the people who are subject to the tax increase oftentimes have homes in other states. Should they declare permanent residency in a state with a lower tax rate, Connecticut would lose those valuable taxpayers for good, which could result in a higher tax burden for middle class families.

Middle class families are not exempt from this budget as it raises fees across the board. From professional licenses for nurses, educators and day care providers, to recreational licenses for fishing and hunting, this budget seeks to raise nearly $100 million in fee increases over the next two years.

Perhaps what’s most troubling about the budget is that it inexplicably borrows approximately $3.7 billion, including nearly $1 billion to close out last year’s budget. In addition, it completely drains the state’s rainy day fund. It is estimated that such borrowing will in itself create an approximate $3 billion deficit for 2012.

The budget, which passed mainly along party lines, became law without the governor’s endorsed signature. While it gives Connecticut a budget for now, it is one that is built on a house of cards. Thus, there is little doubt that we will be back to fix the damage that this budget will create.