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State Ranks Low In Spending

LYNN DOAN

June 09, 2009

State and municipal spending is leaner in Connecticut than most states when measured against the overall state economy, but it has grown in the past decade, according to a University of Connecticut report released Monday.

The study adds fuel to both sides of the state budget debate as legislators struggle to agree on the right balance of spending and taxes to close a two-year budget deficit now estimated at up to $8.7 billion.

In 1997, Connecticut was 48th of 50 states in the percentage of state and local government spending as a part of its gross domestic product, the value of goods and services produced in Connecticut.

In 2006, the state was 47th, according to the latest issue of The Connecticut Economy, a quarterly review by University of Connecticut economists.

Since 1997, Connecticut's non-federal government spending grew from 6.9 percent of overall economic output to 7.3 percent.

The report didn't draw any conclusions, but noted that the hiring of public employees in all six New England states had outpaced population growth.

Connecticut "may be heading down the wrong path," the report said, if the growth in spending and hiring of public employees is a barrier to economic progress.

"But if state and local government spending are critical to a rapid economic recovery, and even to longer-term economic growth, maybe we chose the right path even before the truck rounded the bend," the report said.

The report shows that prosperous states such as Connecticut, with a larger output per resident, tend to rank low in local and state spending as a percentage of its ecomony.

But measured by public employment per 10,000 residents, Connecticut and other prosperous states are closer to the middle of the pack.

The report said that the ratio of full-time state and local government employees in Connecticut rose from 502 workers per 10,000 residents in 1997 to 537 in 2007, when the state had about 200,000 public employees.

Connecticut wasn't alone. Public-sector job growth outpaced population growth in 36 states between 1997 and 2007, the report by Dennis Heffley and MaryJane Lenon said.

Steven P. Lanza, The Connecticut Economy's executive editor, said that the state should be "rightly proud" of where it stands compared with other states.

But its "bottom-of-the-barrel" spending also poses a problem in today's fiscal climate, he said.

"When you start pretty lean," he said, "there's not a lot of places to cut."

Some people don't agree that Connecticut is lean. Reacting to the release of the report Monday at the Capitol, House Republican leader Lawrence Cafero of Norwalk said that the growth in spending must be reversed.

Republicans are pushing for a budget that rolls back state spending to 2007 levels and cuts another $2 billion from state agencies and programs.

House Majority Leader Denise Merrill, D- Storrs, who also attended Monday's release, said that any drastic spending cuts would jeopardize programs that save money in the long run, such as home-based care for the elderly and community-based criminal sentences for nonviolent offenders — and would stunt growth.

Merrill said that Democrats are proposing a budget that would "protect strategic investments" while using a combination of taxes and smaller cuts to "get the job done."