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State Agenda, Part 2: Time For An Honest Budget

Hartford Courant

January 04, 2010

Budget makers took all the easy outs in putting together the state budget for the two-year cycle that began July 1 — a budget that's nearly $550 million in deficit, according to Comptroller Nancy Wyman.

They — Democratic legislators who control the General Assembly, and Republican Gov. M. Jodi Rell, who did not sign the adopted budget but resorted to some of the same accounting tricks in her versions — used every cent of available one-shot revenues, like the rainy day fund and federal stimulus money, to help balance the budget.

In addition to using so much nonrecurring revenue, which will eventually cause problems, they irresponsibly ballooned borrowing to such an extent that Wall Street bond raters shrieked in horror and threatened to downgrade the state's good rating.

State legislative leaders also expanded the use of the device known as "lapses" to unhealthy, historic highs. Lapses are vague and often unrealistic budget assumptions about the amounts that will be cut — such as $190 million in consulting contracts over the next two years — without any guidance on how to achieve those cuts.

State leaders have raised taxes on small segments of the population — the rich and smokers — so they wouldn't anger the majority. And they did all this to avoid what is needed: deep cuts in state government spending (a goal with which Mrs. Rell seems far more in tune than lawmakers) in combination with a broad-based tax increase in which everyone shares some pain.

No Place To Run

There are no more corners to hide in. Federal stimulus money will start running out by the end of 2010 and isn't enough to make up for revenue losses anyway. There's a limit to borrowing. The state's deficit in a few years could reach $3 billion.

If revenue continues to lag, the job of putting together real budgets that keep roads and bridges repaired and schools open and otherwise meet people's needs will be increasingly difficult and painful. Lawmakers and the governor have to do honest budgeting if they are to have taxpayers' confidence in a time of trial.

Enough with accounting gimmicks and phantom fixes. Although everybody knows that budget proposals serve political purposes and are policy documents, those we elect must construct budgets that are transparent and realistic. When the governor and legislative majority are of different parties, they must at least speak the same budget language. A giant step toward that end was taken this year with a law requiring so-called "consensus revenue forecasting" so that Democrats and Republicans can agree on a budget base. More changes are needed.

Get Real On Revenue

If lawmakers expect the governor to cut spending, they shouldn't tie her hands in, for example, closing facilities like the Bristol courthouse and converting state-run group homes to privately run homes. The chief executive needs flexibility to obtain big savings.

Budget writers need to get real about the amount of revenue the state will receive for the sale of its assets or what the state will recover in delinquent taxes. They are not always grounded in reality.

The use of "lapses" in budgeting — savings hoped for from unspecified cuts to be made by agency managers — can be a reasonable tool. But in this year's budget, lapses are five times what is normal. That's not honest.

Nor is the misuse of securitization — selling future revenues from, for example, Connecticut's share of the national tobacco settlement. In this year's budget, no revenue stream has been identified for securitizing $1.29 billion. Where's that money coming from?

Considering that this year's budget was three months late, which created havoc in municipalities and state agencies, legislators and the governor would be well advised to adopt a bipartisan spirit of cooperation and a mutual resolve to get this most important work done on time.

Summoning the backbone to end programs that don't work and to find significant efficiencies in ones that do would be the most honest budget reform of all.