Back to the budget

With legislation on gun control, mental health services and school security - all passed in reaction to the Sandy Hook killings - behind it, the General Assembly can again turn its focus on the traditional challenge of setting fiscal policy. And while certainly not as emotional as the debate that led to the passage of the Gun Violence Prevention and Children's Safety Act, passing a biennial budget will likely prove contentious.

Fiscal analysts point to a 6 percent gap between spending and revenue projections for the fiscal year that begins July 1, a $1.2 billion shortfall.

Contributing to the difficulty factor in closing that gap is the concession deal the governor struck with state union employees in 2011. It requires three years of raises to begin in July, totaling about 10 percent over that time, while a no-layoff provision extends two years. And after agreeing to raise taxes $1.5 billion two years ago to fix the fiscal crisis he inherited, Gov. Dannel P. Malloy has said he does not want to raise or introduce new taxes, probably not a bad idea politically with an election year now nine months away.

The governor's own budget proposal contains plenty of questionable provisions - among them another tax amnesty, extending business taxes set to expire, selling the rights to serve electric consumers, borrowing a chunk of municipal aid to reduce operational costs to the state. The governor also wants to borrow $750 million, and incur about $185 million in interest over 15 years, to accelerate the conversion to budgeting based on General Accepted Accounting Principles (GAAP), a campaign pledge.

As onerous as some of these suggestions are, the governor's instinct not to return to the taxpayers for more money is the right one. On this count the governor's biggest fight may well be with fellow Democrats, who control both legislative chambers, and a leadership that has expressed interest in again hiking taxes.

Longer term, state leaders have to come to grips with the structural problems driving up spending. Between 1992 and 2012, the cost of retiree health plans grew 981 percent, pensions 583 percent. During that same time overall general budget expenditures grew 150 percent, while median household income increased just 60 percent.

The problem in Connecticut is primarily spending.

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