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It's Not Just The Economy: State Must Cut Spending

Hartford Courant Editorial

January 25, 2013

Connecticut, one of the richest states per capita in the union, just can't seem to get on the plus side of the budget ledger.

It's past time that it did.

Despite a special session of the General Assembly called in December to eliminate a projected state budget deficit in the current fiscal year, revenues are lagging again and the state most likely will end the year in the red on June 30.

In a couple of weeks, Gov. Dannel P. Malloy will present a new biennial budget with a $1.1 billion deficit papered over in each of the two years.

All this red ink — after Mr. Malloy had to take care of a $3.5 billion budget deficit he inherited from Gov. M. Jodi Rell and the Democratic-controlled legislature when he assumed office in 2011.

What's going on here?

Too much spending, says the state's big-business lobby, the Connecticut Business and Industry Association, with some justification.

In a sobering report issued last week, CBIA analysts said that state government spending has jumped 153 percent since 1992, outpacing population growth, inflation and median household income.

State employee health benefits have grown an astounding 981 percent, state employee pensions by 583 percent, debt service by 204 percent, Medicaid by 180 percent, and spending on the correction system has increased 178 percent since 1992, according to CBIA.

The report concludes that the pools of red ink are not "simply a function of an underperforming economy but also the product of state spending policy." Tough spending control decisions are needed, says CBIA President John Rathgeber, if Connecticut is to again attract jobs-producing businesses.

The business lobby rightly criticized the common practice of partially scaling back increases in spending and calling that a "spending cut."

CBIA didn't give the Malloy administration enough credit for the difficult changes it made in dismantling the inherited $3.5 billion structural deficit, complained an administration spokesman.

Both the report and the Malloy administration are right to a certain extent.

Mr. Malloy has had much more difficult budget challenges to face than either of his two immediate predecessors, John G. Rowland and Mrs. Rell, and has done well by comparison.

The governor, for example, downsized the state payroll, eliminated some agencies and collapsed others. He negotiated a two-year wage freeze with state workers' unions in exchange for job protection. He won agreement for steps that over time will reduce the cost of health and retirement benefits.

And yes, it's true, as the Malloy administration points out, that the economy is sluggish and that some 30 other states are also facing fiscal problems, so Connecticut isn't unusual in its budget misery.

Critics

But CBIA and other critics are right, too.

It's hard to escape the conclusion that the state could have gotten more out of its negotiations with the unions in 2011. Organized workers still have two more years of job protection, for example, and next year they will start getting raises again.

Harder bargaining is needed the next time a contract expires to get rid of excesses in union contracts — such as figuring overtime pay in pension formulas.

Also, the use of bond money to attract businesses to Connecticut or to entice them to stay should be reviewed. Is it paying off?

A serious effort must be undertake to see whether some services can be more efficiently delivered on a regional basis. Connecticut can no longer afford the luxury of redundancy. For example, the 41 towns in the Greater Hartford Homeland Security Region have a total of 56 separate fire departments, some paid and some volunteer. Is that peak efficiency?

"Merging upward" — that is, coming to some sort of service-sharing agreement with the federal government — must be considered.

The Malloy administration — any administration — must remember that slowing spending growth is not the same thing as cutting spending.

Cuts must finally be given priority.