Resolve the Spending Cap, Stabilize the Budget

How can Connecticut have stable finances if the state’s spending cap keeps changing?
We can’t–but a new commission held a public hearing this week as it moves toward finally setting clear and enforceable definitions for the state’s spending cap.
More than 20 years ago, Connecticut voters—by a 4-to-1 margin—overwhelmingly approved a spending cap to keep the cost of state government within taxpayers’ means to afford it.
Voters demanded the cap as an offset to the advent of the personal income tax in Connecticut.
Testifying this week before the commission, CBIA president and CEO Joe Brennan said, “It is more important now than ever we have a spending cap, given the budget situation and continuing deficits.
“Despite the challenges we face, the state must enact a cap that is ironclad and works,” added Brennan.
“Connecticut must live within its means, focus on providing core services in a more efficient manner and maintain some control over budget growth.”
The cap ties state spending to the growth in personal income in Connecticut—as determined by the greater of the current of rate of inflation or five-year average of the annual personal income growth for the state.

State policymakers closely abided by it for the first decade, but then started finding ways to get around the cap. Over time, definitions of how it’s supposed to work came under question.
Policymakers have moved state spending out from under the cap by creatively 'redefining' it.
Last year was a perfect example, when payments to the state’s pension fund were removed from the spending cap calculation—something that the cap’s writers did not allow.
Also last year, Attorney General George Jepsen issued an opinion that the cap carries no legal authority because the General Assembly never formally ratified the cap into the state constitution.
So lawmakers created the commission during last December’s Special Session with P.A. 15-1, (Section 24) to try to get the cap back on track.
Specifically, the group is charged with setting definitions for “increase in personal income,” “increase in inflation,” and “general budget expenditures.”
This week’s agenda for the 24-member commission included a discussion and review of aspects of state expenditure limitations, as raised in a National Conference of State Legislatures' report, State Tax and Expenditure Limits–2012.
Commission recommendations are due to the General Assembly by December 1 this year.
The commission is encouraging the public to share thoughts and recommendations with them. You may submit testimony through email, (as Word or PDF files).

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