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How To Solve Deficit, Restore Sound Footing

WILLIAM CIBES and NED LAMONT

February 01, 2009

In order to secure a prosperous future for all people in Connecticut, we must build an economy that is fully competitive in the global marketplace. During the coming years, we must emphasize investment in the pillars undergirding that competitiveness: innovation, human capital, infrastructure and the factors that improve the quality of life. And we must make our governments more effective and efficient, focused on achieving results our citizens want.

A working group of key leaders from business, human services and labor unions — of which we are members — believes that the above paragraph outlines a vision to which the state should aspire. The group is convinced that Connecticut's future should not merely be subject to the whims of fortune, like a leaf blown about by swirling winds in a chaotic storm of events, but that our state should develop a strategic plan to make that vision a reality.

But while we work toward our long-term goals, we must also meet the challenge of an immediate fiscal crisis. There is no panacea to solve our current problems. Hard decisions must be made that employ every available option to balance the state budget while doing no harm to the most vulnerable among us and preserving the foundations of future prosperity.

No option can be removed from the table. Balanced budget builders cannot start with presumptions that there will be no service cuts, no layoffs, no revenue increases, no payroll modifications or no diminution of the budget reserve fund.

Instead, state leaders — acting on behalf of all of us — must aim to balance a combination of relatively equal contributions from each of three major fiscal buckets:

• CUTS in projected appropriated spending for the budget year ending June 30, 2010, and the budget year ending June 30, 2011, of $700 million or more, each year.

• REDUCTIONS in existing tax exemptions and tax credits such as those for filmmakers, corporations and mixed-use historic structures, totaling $700 million or more.

• INCREASES in selected taxes and fees, including among others a sales/use tax on Internet sales, an increase in the gas tax and a tax on snacks and junk food, totaling $700 million or less.

The availability of federal economic stimulus dollars, and prudent use of the state's rainy day fund, could mean that the part played by each of these three major categories could be less than the stated targets — although care must be taken to avoid a long-term structural imbalance in the budget by over-reliance on "one-shot" dollars. Specific suggestions for possible actions in each rubric are available, and are scheduled to be posted late Monday at www.ctblueprint.org.

Meanwhile, we must continue counter-cyclical investments in infrastructure that enhance our long-term competitiveness, using both Connecticut capital and federal infrastructure dollars. And we must revamp the way our governments do business so they focus on results.

Our suggestions have been heavily influenced by the work of David Osborne and Peter Hutchinson in "The Price of Government." We applaud Gov. M. Jodi Rell for inviting Osborne to address legislators Monday.

Overall, this plan eliminates the state's structural deficit and balances the budget on a sustainable basis. It shares the burden among all stakeholders; shields the most vulnerable; promotes a smart growth, pro-growth strategy; and protects Connecticut's long-term competitiveness.

With a prudent, constructive, positive approach, we can resolve this crisis and work toward prosperity for all.