Stemming the Flow of Red Ink
Because the budget deficit mitigation plan that state lawmakers approved last month generated its share of controversy, I’d like to explain why we supported it.
We did so knowing that it was far from perfect, and indeed that it may be out of balance before too long. But we had to start stemming the flow of red ink.
The 2017 fiscal year budget, which takes effect July 1, was projected to be $960 million in the red by the Office of Fiscal Analysis.
OFA also was forecasting deficits of $2.25 billion and $2.5 billion for fiscal years 2018 and 2019 respectively.
Our position throughout the legislative session was that any budget gaps needed to be closed with real, recurring spending cuts rather than damaging tax increases or one-time savings.
CBIA also said—and has been saying for years—that we need long-term structural reforms to the way state government spends taxpayer dollars.
While this plan did not contain as many of those structural reforms as we would have liked, it did include some, and it closed the gap with recurring savings and no tax increases. (OFA says most of the cuts in the plan are recurring and will significantly reduce the deficits in FY 18 and 19.)
Therefore, we believed that it was in the best interest of the state of Connecticut and our members to get these spending reductions on the books and move on to addressing the major structural issues facing the state budget.
Were it possible to get other reforms in this mitigation plan, such as an enforceable state spending cap and long-term pension reforms, we would have continued to fight for them.
But we felt strongly that any changes to the plan would make it worse, not better, because there were not enough votes for including more structural reforms. That’s why this November’s legislative elections are so important.
Now the really hard work begins.
We need to accelerate the reform and restructuring of state government to show the world that we are making the state more hospitable for investment and job creation.
A report released today by the Mercatus Center at George Washington University provided yet another blunt reminder of why lawmakers cannot shy away from real, long-term reforms.
That report ranked Connecticut 50th among the states and Puerto Rico for fiscal health, with researchers detailing chronic solvency issues across a range of short and long-term categories.
“The state is heavily reliant on debt to finance its spending,” Mercatus researchers noted.
“Per capita debt is $9,077. Unfunded pensions are $83.31 billion on a guaranteed-to-be-paid basis.
“Total liabilities are equal to 53% of total state personal income.”
Further evidence that fiscal discipline, rather than tax increases that will drive more wealth out of the state and exacerbate our problems, is what’s needed in Connecticut.
Joe Brennan is CBIA’s president and CEO.
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