State employee unions have approved the concessions package proposed by Governor Malloy to gain about $1.6 billion in budget savings over the next two years. With that accomplished, full attention can be given to recharging job creation in Connecticut--and Governor Malloy’s administration is already focusing on a special legislative session this fall to do just that.

Policymakers need to be sure, however, that the budget savings are actually realized. There are significant segments of the $1.6 billion in savings that are still to be identified and fleshed out.

For example, the package includes millions from yet-to-be-identified spending-cut ideas from state employees and projected savings from better use of technology in state government.  

And now, with more turbulence in the nation’s financial markets, the state budget’s increased reliance on income tax receipts is also a concern. As we cautioned just weeks ago, Connecticut is particularly vulnerable to the changing tides on Wall Street.

According to the state Department of Revenue Services, about 39% of Connecticut's income tax revenues last fiscal year came from quarterly payments—from capital gains, dividends and other investment income generated--rather than paycheck withholding. 

Given the economic rollercoaster, this year’s state revenue estimates could be difficult to achieve. That’s why the policymakers must continue to look for ways to make government less costly and more effective.

Gov. Malloy today reiterated that, even with the concessions finalized, he is “committed to continuing to reduce the size, scope and cost of state government. This agreement, therefore, should not be viewed as the end of that process.  Rather, along with the consolidations that are already underway, it should be viewed as the beginning of the re-making of Connecticut state government.”

In fact, the new state budget also contains directives to make the state more efficient--including the consolidation of many state agencies, and several reforms in the areas of corrections, healthcare and government administration, as recommended by the bipartisan Commission on Enhancing Agency Outcomes

Agency mergers and consolidations are already underway to meet the Governor’s goal of reducing the number of state agencies by 30%. He also has charged commissioners with finding ways to reduce their budgets and identifying how their agencies can enhance economic development and job creation.

It’s good for everyone in Connecticut that the employee concessions battle is over.  But policymakers have to stay alert on how the budget is actually working—and keeping state government within taxpayers’ ability to afford it.