Saddled With Government We Just Can’t Afford

November 15, 2010

As published in the Hartford Courant, November 14, 2010
When the General Assembly convenes on Jan. 5 the face of state government will have changed, but our fiscal problems will remain. Connecticut is in the largest, most persistent state budget crisis in its history. Gov.-elect Dannel Malloy and the legislature will face a $3.3 billion deficit in the next fiscal year and a nearly $10 billion deficit over the next three years. The decisions we make in addressing this crisis will, for good or bad, shape Connecticut’s economy and way of life for years.

Although the national recession contributed to Connecticut’s fiscal crisis, out of control government spending is the chief reason why — despite increasing taxes $1.5 billion over the past two years — the state cannot balance its books. Connecticut’s government has grown beyond taxpayers’ ability to pay for it. In fact, state spending has increased 227 percent since 1980 — rising from $4,400 per household to more than $10,000 per household — while median household income remains relatively flat.

The first step to recovery is for the legislature to be honest with taxpayers about the deficit. To that end, Republican leaders proposed — and Gov.-elect Malloy endorsed — implementing generally accepted accounting principles, known as GAAP. These rules established by the Financial Accounting Standards Board are used by most publicly traded companies and would more accurately and transparently report state revenues and expenditures.

Adopting GAAP is likely to show that our deficit is larger than current forecasts indicate. That’s because GAAP will prevent the legislature from using its favorite accounting gimmicks, such as incurring expenses in one fiscal year, but paying for them in the next to artificially balance the budget.

Once we are honest about the budget crisis, we need to build a governing majority of Republicans and Democrats committed to making the difficult decisions necessary to put our fiscal house in order. On Election Day, Republicans gained 15 seats in the General Assembly. In addition to those gains, scores of Democrats ran and won on the basic principles of the Republican Party’s Common Sense Commitment, which includes pledges to reduce government spending and consolidate state agencies. Although it is difficult to trust the motives of incumbent Democrats who voted for tax increases in the summer and called for spending cuts by fall, I will hold them to their campaign promises. A responsible budget solution can be achieved, if legislators represent the priorities of their districts over those of party leaders and special interests.

There is no way around our problem. The legislature should move quickly to reduce spending by consolidating state agencies, eliminating waste and inefficiencies and shifting the responsibility for some human services to private providers. As we reduce government spending, we must help stimulate job growth — not by creating temporary government jobs, but by relieving small businesses and entrepreneurs of the financial burdens and red tape that impede economic development. Raising taxes isn’t the only way to increase state revenues. It is fundamental that when we prioritize economic growth and job creation, we increase revenues by expanding our tax base.

In addition, Gov.-elect Malloy has a responsibility to taxpayers to negotiate further concessions from state employees to take effect July 1, when the current State Employees Bargaining Agent Coalition agreement expires. State employees did offer a concession package of $700 million under the 2009 agreement; however, our worsening economic and financial picture requires all stakeholders to do more. Unlike the state’s private sector, which lost 100,000 jobs during the recession, the public sector avoided layoffs by granting concessions. Still, state employee wages and benefits account for nearly 25 percent of total government spending (more than $4.5 billion annually), and further concessions must be part of any responsible proposal to eliminate our deficit. It is my hope that Gov.-elect Malloy will seek reasonable concessions from state employees that will make their benefits and wages more consistent with the private sector.

Being honest about the crisis we face; building a bipartisan coalition of legislators committed to reducing government spending and creating jobs; and bringing state employee wages and benefits more in line with the private sector are keys to responsibly balancing the budget. Leadership and the political will to make difficult, but necessary program cuts will get us the rest of the way. Nothing short of the future of Connecticut is at stake.

John McKinney, R-Fairfield, is the state Senate minority leader.