Appropriations Committee approves leaner state budget

Republicans question if savings are realistic

(March 28, 2008) Tough economic times are causing state policymakers to put the brakes on state spending. As an example, the legislature’s Appropriations Committee this week approved a revised, $18.4 billion budget for fiscal year 2009 that’s less than what lawmakers last year OK’d for the second year of the biennial budget.

However, the fact that the committee’s budget was approved on a party-line vote with Democrats supporting and Republicans opposing, means there’s still work to do. The biggest question is whether or not certain savings in the budget are attainable, as the Democrats say, or unrealistic, as Republicans charge.

Last year, lawmakers and the governor agreed on a two-year, $36 billion budget and in this session will make changes to the second year of that plan (fiscal year 2009).

Policymakers on both sides of the aisle are mindful that the economy is under increasing stress. Plummeting state tax collections have caused projections of a state budget surplus this year — originally pegged between $160 million and $260 million — to shrink fast.

State officials say a clearer picture will come after income tax returns are filed on April 15. Lawmakers and the governor’s administration are not expected to agree on a revised state budget until close to the end of the session this year on Wednesday, May 7.

Some increases
The Appropriations Committee budget increases funding for nursing homes and nonprofit social service agencies. It also calls for support for the financially troubled University of Connecticut Health Center and additional funding for municipalities.

Making this new spending possible, say majority Democrats, is shaving about $110 million for Medicaid-funded health care programs because of surpluses in those accounts in the last four years. These are the savings that Republicans are questioning.

The Finance Committee will soon follow with its revenue projections, but majority Democratic leaders are already saying they are not optimistic about making any tax cuts this year, including the proposed elimination of the $250 business entity tax.

Gov. Rell’s midterm budget adjustment calls for a revised $18.5 billion state budget for fiscal year 2009, about $89 million more than the budget approved last year. Her budget spending will increase primarily because of higher than expected health care and energy costs as well as the cost of criminal justice reforms recently adopted by the legislature.

Review needed
CBIA is encouraged that the Appropriations Committee’s proposed budget is under the spending cap and appears to have been scaled back in an effort to be fiscally responsible. However, rigorous review of potential savings is necessary before the budget can be adopted by the House and Senate.

For more information, contact CBIA’s Bonnie Stewart at 860-244-1925 or bonnie.stewart@cbia.com.