Budget Shortfall: Lack of Attention to Future

To plug a $726 million deficit for fiscal year 2011—the calm before the storm of a projected $4 billion gap in FY 2012—lawmakers adopted a revised, $19 billion budget with a patchwork of federal aid, surplus dollars from this year’s budget, payment deferrals and some spending cuts.
Still, avoided were any structural changes to state government that could help the state start charting a better fiscal course. The budget fixes are mostly short-term, postponing the inevitable significant changes that will have to take place.
State government has grown beyond the ability of taxpayers to afford it, and the recession has brought significant changes to Connecticut’s economy and traditional sources of revenues.
However, left unapproved were most of the legislative proposals aimed at improving the efficiency of state government, except a prison-reform measure that was passed.
And while there were no direct tax increases in the budget, it does reduce but prolong an additional charge on CL&P customers’ energy bills that was to expire this year.
Instead, ratepayers will keep paying a lower charge (UI customers will follow), and the state will borrow against those dollars for the next eight years to patch the state’s budget deficit.
Also on the energy front, the budget diverts $29 million per year from a state energy conservation fund. There are few quick-fixes left and multi-billion dollar state budget deficits are just around the corner.
It is clear that a major restructuring and downsizing of state government is needed if the state is to finally deal with its fiscal crisis in ways that acknowledge the depth of our fiscal problems–but won’t stop our economic recovery in its tracks.
For more information about the budget, contact Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.