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Why state relief makes sense

The projected deficits facing Connecticut in the next two fiscal years are a good example of why it makes sense for a future Washington coronavirus relief program to contain some fiscal help for states, even if that will have to await President Joe Biden taking office Jan. 20.

Yes, Connecticut faces a projected deficit — $4.3 billion over two years on a roughly $20 billion annual budget — in part because of prior bad choices. Connecticut must play catch-up because state and teacher pension accounts were grossly underfunded for decades. Also, borrowing has often been too extensive and indiscriminate.

In declining to support fiscal relief for states as part of a pandemic stimulus package, Republicans in the U.S. Senate have said the federal government should not be bailing out states for such bad fiscal practices.

Fair enough, but it is simply inaccurate to say Connecticut now faces these projected deficits only because it borrowed too much and did not save enough. Income and sales tax revenues are down, no surprise given the job losses and reduced economic activity.

Rather than being irresponsible, the state legislature, because of bipartisan spending and volatility caps adopted four years ago, actually has put Connecticut in a strong position to deal with a downturn. The state has amassed a record budget reserve (or rainy day fund) of $3.1 billion, of which about $2.2 billion is expected to remain at the close of the current fiscal year in July, with $900,000 used to close a pandemic-associated shortfall in this year’s budget.

Yet that reserve will still only cover about half the projected deficits to come.

Looking at it another way, if this was a typical economic downturn, Connecticut likely would have been able to meet its pension and debt service obligations and, thanks to the large surplus, offset any loss of revenue tied to the economy.

But this is not a typical situation, it is a shared national disaster, which is why it makes sense for aid from Washington to be used to partially cover the gap. Such an approach will help states avoid cutting jobs, reducing services and raising taxes to balance their budgets, all of which would act as a further drag on the economy.

It is not Congress’ job to fix Connecticut’s fiscal problems. But in this moment, it makes sense for it to help this and other states.

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.


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