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    Editorials
    Tuesday, May 14, 2024

    Finding path to a fiscally responsible Connecticut budget

    The real state budget debate is about to begin in Hartford. The governor, the Democrats in control of the Appropriations Committee and the Republican minority have laid out their plans for filling budget gaps projected at $1.3 billion and $1.4 billion over the next two fiscal years.

    How these factions interact over the next few weeks could determine if Connecticut gets a budget that controls the size of government or expands it, whether spending and taxation policies assist the economic recovery or undermine it, and if the sacrifices called for are fair.

    The budget submitted by Democratic Gov. Dannel P. Malloy to the General Assembly in February was a poor effort by the administration. It contained major cuts to social programs, which would hurt the most vulnerable, and demanded no concessions from state labor. The first year of the two-year spending plan exceeded the constitutional spending cap by more than $50 million, which the administration attributed to an error but never corrected. According to state Treasurer Denise Nappier, a Democrat, the proposed budget was also $305 million out of balance due to some proposed sleight of hand in the handling of state bonds.

    Hard to take serious is the budget that recently came out of the Appropriations Committee. It proposes spending $19.9 billion and $20.6 billion over the next two fiscal years, which is $544 million more than the governor proposed and blows through the spending cap. It would require sizeable, but as yet undisclosed, tax hikes.

    How is that possible? The committee seeks to change the rules for calculating the spending cap, excluding the cost of contributions to the state employee pension and retirement health care plans. It does not do so honestly, ignoring cap rules requiring spending in the current year to be recalculated in the same fashion. Following the rules would eliminate the cap space the committee magically seeks to create.

    The game playing does allow Appropriations and its Democratic chairwomen, Sen. Beth Bye and Rep. Toni Walker, to heroically restore the big cuts to social services proposed by the governor, reinstate school and library funding, and even provide a small boost in municipal aid.

    The problem is that its proposed change in the cap is ill advised. In any event, it is highly unlikely the changes would obtain the required three-fifths vote in the House and Senate to win approval. Lastly, the taxes imposed to support such an increase in spending would damage and potentially reverse the state’s economic recovery, while driving more citizens and businesses out of Connecticut.

    Republicans have submitted the most serious-minded budget proposal, but one that seeks to take Gov. Malloy where he does not want to go — scaling back labor costs.

    Unveiled last week by House Minority Leader Themis Klarides and Senate Majority Leader Len Fasano, the "Blueprint for Prosperity" makes the compelling point that the savings promised of labor have yet to materialize. The Office of Fiscal Analysis concluded that the labor concession deal Gov. Malloy reached with the unions after his first election, when addressing a deeper fiscal crisis, ended up falling $253 million short of the $900 million annual savings projected.

    Most fanciful was the expectation of $90 million in yearly savings when rank-and-file workers got the chance to suggest ways to make government more efficient. A joint labor-administration panel tasked with producing the efficiency-improvement plan met once, elected co-chairs, and never met again.

    The Republican budget demands that the administration produce the promised $253 million in annual savings over the next two years. It also eliminates $100 million the governor set aside in the second-year budget to pay for anticipated pay hikes of around 5 percent. It seeks to trim overtime costs and boost employee pension contributions, which at 2 percent are among the nation’s lowest. These are reasonable proposals.

    The Republican plan eliminates the governor’s proposal to cap tax credits that businesses were promised and planned on. That anti-growth revenue raiser deserves the heave ho. The minority plan would also restore the deep social service cuts proposed by Gov. Malloy.

    Showing a degree of realism not seen in the alternative Republican plans of recent years, the proposal delays or cancels some tax relief adopted last year, as the governor also suggests.

    With a larger Republican minority, particularly in the House, there is the potential for compromise between Republicans and moderate Democrats. Gov. Malloy, meanwhile, has vowed to live within the cap and called on the legislature to set fiscal policy that recognizes the “new normal” of modest economic recovery.

    These dynamics hold out the possibility that Connecticut will get a fiscally responsible budget that rejects the cap-busting recklessness espoused in the Appropriations’ proposal.

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