New State Budget Caps Spending, Bonding

November 21, 2017

After the income tax was imposed on Connecticut residents in 1991, residents were given the opportunity to vote for the creation of a constitutional spending cap. More than 80 percent of voters approved the creation of a spending cap as a way to force state government to live within its means.

Unfortunately, for nearly 25 years, the legislature failed to adopt a definition of what spending would be subject to the cap. Without any controls in place, state spending increased by more than 200 percent since 1992. I’m sure that neither the economy, nor taxpayers’ paychecks have increased by 200 percent during that time.

Since 1992, Republicans in the General Assembly have been fighting for the creation of spending cap definitions so runaway state spending could be brought under control. The great recession that started in 2008 should have been a wake-up call to the Democrats controlling state government.

But the last few years, things in Connecticut changed dramatically. More people moved out of the state than into it. Despite tax increases, the money collected by the tax department continued to fall short. Businesses like GE and Anthem announced that they would be leaving our high-tax state. Connecticut saw budget deficit after budget deficit. Voter anger grew about the direction the state was heading.

For the first time in more than a century, the number of Republicans and Democrats in the Senate was tied, 18-18. In the House, Democrats held the majority by a mere seven seats. It’s been more than a decade since Republicans had this much leverage.

During our overly long legislative session, Republicans presented budget after budget that capped spending and bonding. Our budgets contained structural changes to state government to start the process of putting the bloated beast on a diet.

On the other side, some Democrats called for more tax increases on the wealthy and cuts to schools, towns, and social programs to erase the deficit.

However, some moderate Democrats said, “No!” And that’s when things changed.

In September, a small number of fiscally conservative Democrats in the House and Senate joined Republicans to pass one of our budgets. The surprise vote sent shockwaves throughout the state.

Governor Malloy vetoed the budget, but the momentum for change was already under way. Republicans could not generate enough votes to override the veto, but Democrats also could not garner enough votes for another big tax and spend package.

Democrat and Republican leaders met behind closed doors, without the Governor. Spending long hours over several days, legislators created a budget that was the product of incredible compromises from both sides. No side got everything it wanted and everyone is a little unhappy with the end product. Everybody had to give up at least a little something in order to do what is in the best interest of the entire State of Connecticut.

Republicans compromised, but did make major gains with this budget. The constitutional spending cap I talked about in the beginning is now a reality. The increase in General Fund spending cannot be higher than the increase in individual income or the increase in inflation.

We also capped bonding at no more than $1.9 billion a year to curtail the amount of debt the state takes on each year. All future union contracts must be voted on by the legislature and union agreements that collectively cover all state employees cannot be longer than four years. Additionally, the State Comptroller must analyze the monthly budget statements from the governor’s office and a pension legacy debt commission must be formed to seek ways to address the state’s underfunded pensions.

These are all positive changes that will help stabilize Connecticut’s economy and attract and grow businesses and jobs. But I believe the spending cap is the most important because it is now a part of our state’s constitution. Exceeding the cap can happen only if three-fifths of the House and Senate approve it. It also forces the state to save money in the event of a surplus.

I look forward to the next legislative session and the opportunity to continue pursuing important policy changes that will make Connecticut more competitive, more fiscally stable, and business friendly.