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Feel the Pain

None of the proposed fixes to the state's budget crisis are nice, and you don't even want to know about 2012

Gregory B. Hladky

December 22, 2009

Bend over Connecticut, state government is getting ready to give you its holiday gift.

The exact shape of that present hasn't been decided yet, but you can count on it being painful. The budget approved less than four months ago is already about $550 million out of wack, and there's no indication the economy or state revenue will improve any time soon.

Would you like to close a prison, or shutter that home for disturbed kids? How about chopping money for cities and towns? Maybe you'd rather gut the campaign finance system before federal courts do. Or we could renege on our promises to pay what we owe state retirement plans.

It doesn't matter which plan you choose — Republican Gov. M. Jodi Rell's, some Democratic alternative, or the GOP version — they're all ugly and they're all likely to fall short of plugging the gaping holes in the budget.

Democrats met early this week to push for a plan that included $116 million in budget tweaks like shelving a scheduled $40 million cut in the estate tax. They say their goal is to avoid Rell's proposal for $84 million in cuts to cities and towns and to save 5,000 jobs.

State House Majority Leader Denise Merrill said she was uncertain whether Rell would hold her nose and swallow the democratic package or veto it. "None of these are things we want to do," Merrill said.

The options have been ugly for a while.

"We have the same choices we've had for the past year," according to Deputy House Republican Leader Themis Klarides of Derby. "You can make cuts or you can raise taxes. ... Both cause pain."

The problem is so big lawmakers can't quite come to grips with it. "The gap is larger than any solution that's been talked about yet," said State Senate Majority Leader Martin M. Looney, D-New Haven.

Rell called lawmakers in last week for a special deficit session. They accomplished nothing. No big surprise.

It took eight months of squabbling and caterwauling to cobble together the two-year, $37.6 billion tax-and-spending scheme approved in early September. Republicans who voted against that budget are now deeply into I-Told-You-So mode.

"We said this was going to happen," said Klarides.

You can't really blame them. Democrats dominate the House and Senate, which means GOP lawmakers generally get ignored, even by their own governor. They wanted Rell to veto that budget and force more cuts. Instead, despite her professed unhappiness with Democratic spending, she allowed the budget bill to take effect without her signature.

Of course, it was easy for Republicans to vote against a plan that raised taxes on couples making more than $1 million a year. It was easy even though most Republicans knew in their hearts some kind of tax increase was essential to avoid castrating social services, local aid and laying off thousands of state workers.

Rell, the most popular politician in modern Connecticut history, delivered another kick to the GOP's groin by announcing she won't run next year. That wasn't much of a surprise, considering how grueling the 2009 budget fight had been. But it leaves Republicans with a bunch of virtual unknowns trying to jump-start their campaigns in the middle of a fiscal nightmare.

Things could be worse. We could be California, suffocating under a projected $21 billion deficit.

State Comptroller Nancy Wyman has cut back on her estimate of how badly Connecticut's budget is doing.

On Dec. 1, Wyman's staff predicted the state would end this fiscal year on June 30 with a $549 million deficit, or about $75 million below their previous calculation. It went down due to the cancellation of a half-a-percent cut in the state sales tax that was scheduled to hit on Jan. 1.

Democratic leaders are looking for a compromise fix that House and Senate rank-and-filers can swallow, maybe before Christmas, or at least before the next legislative session begins in early February.

"I'm hoping we can do something substantial to address most of the gap, if not all of it," said Looney.

Democratic options include postponing a $100 million scheduled contribution to the state employees retirement fund and saving as much as $70 million by canceling a scheduled reduction in the estate tax.

Looney called the social service cuts Rell and the Republicans say are needed "harsh and excessive," particularly when they hit services for children.

Republicans like Klarides insist the state has no choice but deeper cuts, including taking the money away from public campaign financing.

"Nobody wants to make cuts; nobody wants to make the tough decisions; but that's what we got elected for," Klarides said.

Getting elected is the underlying theme for everybody in this scenario except Rell. The knowledge that 2010 is a legislative election year is a scary prospect for Democratic incumbents who know how unhappy voters are, while Republicans plan to cash in on all that anger.

The scary part of this deal is hearing a true-blue Democrat like New Haven Mayor John DeStefano sounding almost like, well, like a Republican.

"I think they [state lawmakers] are going to try to do this piecemeal," DeStefano said of the legislature's pussyfooting approach to the current budget trouble. "Everybody's going to have to sacrifice ... even the cities," he added.

DeStefano isn't even that worried about what's happening now, despite Rell's desire to slash $84 million from state aid to cities and towns.

"I think these [current state budget woes] are all the little brush fires before the big problem comes in 2012," warned DeStefano. "It's going to be of such a scale that it makes the issues we're dealing with now seem small."

DeStefano said the worry is the big stuff used to patch together this two-year budget plan won't be available next time. That includes more than $1.4 billion from the state's budget reserve fund, gobs of money from the federal stimulus package, and $1.3 billion in borrowing.

He estimates the remaining "structural" hole could reach $3.5 billion. If you eliminated all state aid to cities and towns, you still wouldn't fill that cavernous gap.

"I don't think the public is clamoring yet for a meaningful budget fix," he said. "I don't think Connecticut's ready to grapple with it."

The General Assembly sure as hell isn't.