More Work Needed on State Budget

Proposed changes to the state budget address some of Connecticut’s  competitive priorities and lay the groundwork for further revisions to improve the state’s economy and finances.

That’s according to CBIA vice president and economist Pete Gioia, who testified before the Appropriations Committee this week on HB 5030, containing Gov. Malloy’s proposed state budget revisions. 

Gioia said that CBIA supports much of the proposal but sees areas for improvement and has ongoing concerns about the state’s fiscal and economic condition.

“While the state’s economy is improving,  many employers are struggling and few are confident enough to add significant numbers of jobs,” said Gioia.

Effectively managing the state budget is critical to giving businesses the confidence to create jobs and increase their investments in the state.

And doing that will boost Connecticut’s competitiveness, its standing in national economic and business climate rankings, and ability to retain businesses and attract companies and jobs to the state.

Calculated Spending

With the state slowly bouncing back, said Gioia, policymakers should prudently allow for “careful and calculated spending” that will help the state’s recovery and the budget proposal does that in several areas, including:

• Education initiatives
• Manufacturing support
• Long-term healthcare reforms
• LEAN initiatives to improve government efficiency
• Transportation infrastructure 

Those are among the priorities identified by the state’s business community for building a brighter economic future for everyone in Connecticut, as reflected in CBIA’s 2014 Government Affairs Agenda.

But lawmakers also need to keep focusing on ways to make state government more effective and efficient.

As both CBIA and Connecticut Voices for Children agree, above-average growth in certain areas of the budget threaten to reduce discretionary spending in such vital areas as education, human services, transportation, and public safety.

Room for Improvement

Gioia cited state employee retirement benefits, long-term healthcare, and the state’s corrections system as areas of spending growth that weaken the state’s ability to meet needs in other important services.

• Connecticut’s unfunded liabilities are a serious obstacle to balancing any budget. The governor's proposal to add $100 million to accelerate pension contributions is a good idea but state employee unions could offer reasonable ways to reduce these long term obligations. The Connecticut Institute for the 21^st Century has outlined many opportunities for improvement.
• The revised budget also promotes greater use of home healthcare versus institutional care where appropriate. This again is a good idea with the potential to save millions of dollars–if Connecticut can commit to a  comprehensive and accelerated effort at easing home care options.
• More needs to be done to reform corrections and reduce recidivim. Efforts are underway, and the Appropriations Committee should see if strategic investments or changes (CT 21) could produce both cost savings now and over the long term.

Lean State

Streamlining state government has begun in Connecticut with notable successes, for example, in the state Department of Energy and Environmental Protection (DEEP).

While the governor proposes to expand the use of lean practices, the technique should be applied throughout all major agencies to improve effectiveness, customer service, efficiency, and cost savings.  

Measure Results

Hand-in-hand with lean efforts should be measuring how well state programs are working. Some parts of the state have begun to use results based accounting (RBA) but lawmakers currently have no way to review, measure and report results. RBA should be a core requirement in all state programs.

Controlling state spending is difficult, but lawmakers must make the tough decisions now to improve the fiscal climate while fully protecting our still fragile economy.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 | bonnie.stewart@cbia.com | @CBIAbonnie