State Budget Still Work in Progress

With just days left to the 2013 session of the General Assembly, legislative Democrats and the governor’s office are still working on final details for the next two-year state budget. At issue is finding sufficient revenue to support the $43.9 billion proposal—which represents an increase in state spending of about 10% over the current state budget.

It’s likely that state lawmakers will be in session throughout the weekend in order to finalize the budget.

Among other things, the budget proposal extends three business taxes that were to sunset at the end of June, and relies on an accounting maneuver to bypass the state’s spending cap and enable $1 billion in additional spending over the two years.

Even after a record $1.5 billion state tax increase in 2011, policymakers had to address a $2 billion deficit for the next two fiscal years as Connecticut’s economic recovery and job creation continued to be slow in the making. 

Not being able to sufficiently lean the cost of government, budget-writing lawmakers appear to be unwilling to make many of the tough decisions needed to limit the growth in state spending.

Instead, the budget extends the 20% surcharge on the corporation business tax, a tax on certain generators of electricity (at a lower rate), and a reduction in the credit limit for the insurance premium tax—all of which were set to expire at the end of this fiscal year.  

In addition, under discussion is a proposal to bypass the state’s constitutional spending cap by taking large sums of money off the budget. It’s an accounting maneuver to allow an unsustainable level of state spending and creates a loophole that will enable lawmakers to increase spending again in the future when budget ends don’t meet.   

What policymakers must come to grips with is that we have to stop spending beyond our means–and find more ways to reduce the budget and increase the effectiveness and efficiency of state government.

Exhibiting fiscal responsibility—limiting the growth rate in spending and not extending set-to-expire taxes—is the best way to restore business confidence and help grow our economy.

Recently, officials found significant new savings in the budget. Policymakers should keep looking, and there are many suggestions available on how to reduce state spending.

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