Expediency Trumps Responsibility: 2010 Legislative Session

May 7, 2010

The 2010 Legislative Session will be remembered as one in which the majority leadership refused to face the biggest fiscal crisis of our time.  The job of resolving this problem was placed on the doorstep of the next Governor and legislature.

This did not need to happen. The General Assembly could have, and should have, done the right thing by adopting a new budget based on the reality that our government has grown too big and too expensive for taxpayers to support – and that the state could not spend more than it took in. Repeatedly, Republican legislators proposed cutting state spending significantly, proposals that many others worked hard to avoid.

A slight uptick in tax collections, along with additional borrowed funds, provided a false sense that our financial crisis is nearly over, that we can afford to delay making the politically difficult decision to put a brake the state’s high costs (capital burn rate). Nothing could be further from the truth.  The U.S. and European economies continue to be volatile and uncertain.

Yet, the majority leadership pushed through a newly revised state budget for Fiscal Year 2011 that relies on keeping a portion of an electricity tax that had been set to expire, and borrows against this ongoing revenue stream; relies on one time federal stimulus funds; seriously underfunds the state’s pension fund by $100 million dollars and spends the last of the state’s reserve account.  Keep in mind that Connecticut’s electricity costs are already among the highest in the nation and depleting our Rainy Day Fund will further erode our bond rating.  Delaying pension contributions does not erase the state’s obligation to pay them and the federal revenues we are depending this year will not be available to us next year.

The political will to work with Republican legislators to make the structural changes necessary to reduce costs, consolidate state agencies, or bring the state employee unions back to the table to negotiate further concessions was simply not there. Preserving the status quo was the order of the day.

We know that Connecticut is facing a $3.4 billion deficit in 2012 and $3.2 billion in 2013. Connecticut’s debt ratio is among the highest in the country and its post employment benefits obligation now exceed the state operating budget- a recipe for disaster.  How will we deal with this?  More borrowing? Further raising taxes? New and more dangerous fiscal gimmicks?

Clearly, Connecticut’s next Governor and next General Assembly will inherit a budget mess. Cleaning it up will require the structural changes that some courageous legislators have been proposing over the last two years. These include negotiating with state employee unions for cost saving concessions beyond what they and Governor Rell have already agreed to; consolidating and downsizing state agencies; reducing legislative pay; eliminating franked mail and travel expenses; and privatizing certain state functions. It is a fact that excessively taxing job creators forces them out and further reduces revenues. We have only to look to the states of Vermont and Maryland. They retreated from this misguided strategy when jobs fled their states.

I voted against the new state budget pushed through by the legislative majority precisely because it puts off the difficult decisions that we must ultimately make in order to restore prosperity to   Connecticut. As Ridgefield economist, Nick Perna stated: “Connecticut does not need to tighten its belt; it needs to go on a permanent diet.” What we need is leadership that is determined to make the tough decisions that must be made. The public has had enough.