Commission Debates Spending Controls

The state’s Spending Cap Commission met this week to begin finding clear, enforceable definitions for the spending cap, a job they must finish with a report to the legislature by the end of this year.
The 24-member commission was created during last year’s December special session (PA 15-1, Sec. 24), and is chaired by former state budget director William Cibes, Jr. and former state representative and Finance Committee chair Pat Widlitz.

The commission is charged with developing recommended definitions of the key terms “increase in personal income;” “increase in inflation;” and “general budget expenditures.”
The cap was overwhelmingly approved by voters in 1992 as an offset to the income tax that was passed the previous year.
It was created to keep state spending growth in most budget appropriations in line with actual personal income increases and inflation.
There have always been some budgetary exceptions from the cap, such as debt payments and spending necessary to comply with court orders.
But over the last few years, more and more expenses have been shifted and deemed exempt from the cap by generous interpretations of exempt expenditures.
The commission focused this week on responding to questions posed during an earlier public hearing, including whether capital gains should be part of the personal income growth definition and keeping accrued pension liabilities and debt service under the cap.
Rep. Richard Smith (R-New Fairfield) said if state employee pensions were calculated as expenses under the cap, then government spending was well in excess of the cap’s limits.
He questioned whether setting these expenses aside defeats the very purpose of the cap.
He noted that by continuing to exclude debt expenses, the state cannot effectively control government spending.
Widlitz stated that in a perfect world, liabilities would be paid as incurred, but said a “reasonable definition of cap” that doesn’t strangle the state’s ability to function and provide services was necessary.
Rep. Jonathan Steinberg (D-Westport) called the state’s failure to meet its obligations "egregious," saying the challenge was to create a mechanism for addressing the state's fiscal situation and meeting its obligations.
Connecticut, he said, needs a cap for the long term, "something that’s consistent and constant."
The commission's next meeting is Monday, June 6 at 1 pm in Room 1E of the Legislative Office Building.

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For more information, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco