When the people who work with numbers for a living are concerned about a balance sheet, it should cause red flags. And what’s concerning the chairman and CEO of Webster Bank, and the president of the Connecticut Society of Certified Public Accountants (CSCPA) is the state of Connecticut’s balance sheet.
In two recent statewide publications, James Smith of Webster Bank and CSCPA’s Camille Murphy called attention to the state of Connecticut’s finances.
“Although the higher-than-expected tax receipts do indeed offer a brief respite,” wrote Smith in the Hartford Courant, “we shouldn’t delude ourselves into believing our state’s fiscal challenges are suddenly solved.”
According to Murphy, the problem is simple: “We spend more than we take in,” she said in an interview in Business New Haven</em>. “We have made commitments greater than we can afford, and there are very few solutions to getting out of this.”
CSCPA, a nonpartisan group, has launched a “Save Our State” campaign to both call attention to Connecticut’s fiscal crisis and offer ways to solve it.
“Having billions more in liabilities that what’s available as assets is not a healthy way to run your personal life, your business life, your state government or the federal government,” says Murphy, partner at Bailey Murphy & Scarano, LLC.
However, the Malloy administration has reduced the state’s long-term debt by $11.6 billion through reforms, such as by state employees paying more into their retirement funds and healthcare, and by accelerating payments against the debt. And the state also has put more than $270 million into the Rainy Day Fund.
Both Smith and Murphy cautioned about the state facing at least hundreds of millions in operating budget red ink in the coming fiscal years.
“Most economic forecasts for Connecticut agree on one point,” said Smith. “Large deficits resume with a vengeance in 2015 when projections indicate a state budget deficit of $1.1 billion or more as embedded spending increases outpace revenue growth.”
Webster, the Connecticut institute for the 21st Century and regional chambers of commerce are spearheading a public dialogue on the state’s fiscal situation.
Smith credited Gov. Malloy with taking steps to fund the state’s long-term obligations, making state finances more transparent and making infrastructure investments. “Let’s hope that’s just the beginning,” he added.
Murphy noted that Connecticut’s economy is improving, “but it’s not going to be enough to solve the problem.”
According to the CSCPA, what will work for Connecticut in the long run is to drive economic growth and increase the state’s economic competitiveness; and continue to “create transparency, accountability, efficiency and transformation throughout state government.”