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    Friday, May 24, 2024

    A whole different budget session

    The Connecticut General Assembly wrapped up its regular 2024 session Wednesday night. In the so-called “short session” meant primarily to update the biennial budget, the representatives and senators passed some bills and did not act on others. Some bills went to Gov. Ned Lamont for signature, and some of those the governor signed immediately into law. Nothing unusual about any of that.

    What was unusual was a decision by the legislature’s Democrats to stabilize the budget as adopted last year, rather than reopening it based on subsequent numbers. The majority party did so in response to the novelty of an astonishingly high budget surplus, after decades of the fiscal exact opposite.

    While the Republican minority chafed over its inability to raise or reopen tax and spending matters, the budget leaders saw a unique combination of opportunities: the need to use or lose federal ARPA funds by the end of the year; and what to do about a hands-off, billion-dollars-a-year windfall that appeared a week before the session ended.

    Those problems differ dramatically from dealing with draconian cuts in services and the perennial possibility of more nuisance taxes, as previous sessions have had to resolve.

    As explained by Keith M. Phaneuf in the online CT Mirror, “Lawmakers crafted the budget stabilization bill rather than formally adjusting the $26 billion budget they adopted last June for the 2024-25 fiscal year. This enabled legislators to avoid spending cuts mandated by state budget rules and to spend a portion of surging state revenues that are supposed to be saved.

    “In return for helping his fellow Democrats circumvent these budget rules, known as ‘fiscal guardrails,’ Lamont was granted expanded authority to shift funds from one account to another and to achieve $129 million in broadly defined efficiency savings after the next budget is in force.”

    The fiscal guardrails cited include restrictions required under spending and volatility caps and maintenance of a substantial rainy day fund, measures adopted with bipartisan support in 2017 during the darkest days of deficit spending.

    But times and state revenues have changed. Not only did Connecticut tighten its spending and make strides in paying down its pension debt, the state also began receiving better returns on its investments and higher capital gains tax payments from taxpayers.

    In the current economy, the fiscal rules by which the legislature bound itself seven years ago set the state up to put aside more than double its original estimates, to about $1 billion more than calculated for this year and each of the next two years. The current surplus will also grow because of federal Medicaid grants and certain other revenues.

    Faced with those rules and with the bad taste of leaving federal dollars on the table, the majority voted to allocate $370 million in pandemic grants to higher education, social services, mental health, child care and town aid. Republicans responded that the move will mean budget holes to be filled by means of new taxes next year.

    The logic of putting federal funds to use makes sense, however, given the rare alignment of opportunities. The uses to which the legislature has assigned the $370 million are those continually identified as pressing needs for residents and taxpayers.

    This year’s unique circumstances reaffirm that fiscal policy that forces savings is the means to an end, which is the state’s primary responsibility of good governance.The 2017 rules turned the Titanic, for which the people of Connecticut should be grateful. And now we need Part II: What should guide the legislature when the storm subsides and the rainy-day bucket is filled up?

    Even in ordinary times, it is the Connecticut way to take its lawmaking in stages. The first time a subject comes up, the relevant committees start to look at it and, by next year, may begin to know what they think. This year’s beneficiaries of the two-step process include housing reform; maybe next year it will be climate change and AI.

    And perhaps the intervening months and election-year politics will see some debate about how to put a windfall to the highest and best use.

    The Day editorial board meets with political, business and community leaders to formulate editorial viewpoints. It is composed of President and Publisher Timothy Dwyer, Executive Editor Izaskun E. Larraneta, Owen Poole, copy editor, and Lisa McGinley, retired deputy managing editor. The board operates independently from The Day newsroom.

    Comment threads are monitored for 48 hours after publication and then closed.