CBIA Board Urges State to Get Its Fiscal House in Order

Recommendations include sunsetting tax increases, achieving net decrease in state spending

On March 14, 2011, CBIA’s Board of Directors adopted several resolutions on business-critical public policy issues (see Page 2), including one concerning the state’s fiscal crisis and long-term fiscal policy. Here is what the Board had to say.

Support for Governor’s Goals

The CBIA Board of Directors appreciates and supports Governor Malloy’s goal of putting Connecticut’s fiscal house in order and his recognition that solving the state’s budget crisis, both short- and long-term, is essential to our economic recovery. The Board further agrees with the governor that the best path to economic recovery is to restore business confidence in the state as a good place for investment and to put people back to work. Connecticut must be economically competitive not only regionally but also nationally and globally.

Government Spending, Reform

The Board believes that Connecticut can and should be a national leader in providing high-quality services in a lean, efficient, cost-effective manner. For that to happen, the state must consolidate operations, streamline processes, and reform outdated work rules that inhibit innovation and efficiency. While the Board understands that the governor inherited the state’s fiscal and economic problems and that his proposed budget is a good foundation for the General Assembly to build upon, the Board believes that more must be done to make this vision of state government a reality. Significant savings can be achieved through the recommendations of the Connecticut Regional Institute for the 21st Century and the best practices of other states.

The Board also believes that it is critical that the Malloy administration achieve its targeted savings from state employee union concessions. Furthermore, as part of those concessions, reforms must be made to wage and benefit contracts that address the state’s long-term, unfunded obligations.

Tax Concerns

Finally, the Board believes that several aspects of the governor’s tax package, particularly the throwback rule and steep increases in the personal income tax, will render key components of Connecticut’s economy less competitive and inhibit the state’s economic recovery.

Action Needed

Therefore, it is resolved by the CBIA Board of Directors that the governor and the legislature must:

Make significant and sustainable cuts to the governor’s proposed budget, utilizing the recommendations of the Connecticut Regional Institute for the 21st Century and other sources to ensure that there is a net decrease in spending over the biennium compared with the current fiscal year.

Secure real and lasting concessions from state employees totaling at least $1 billion in each of the next two fiscal years that will bring wages and benefits more in line with the private sector.

Utilize tax increases only as a last resort and minimize any increases by exhausting all possible means of reducing spending. The state must avoid tax increases that would hurt the competitiveness of Connecticut or its businesses or slow the state’s economic recovery. Further, tax increases that are detrimental to our economic recovery should include automatic sunset dates.

Develop a comprehensive plan to reduce Connecticut’s massive unfunded liabilities, currently standing at over $70 billion.