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State Budget Framework Isn't Pretty, But It Works

State Capitol is making do in challenging times

Hartford Courant Editorial

May 29, 2013

The "framework" state budget agreement reached over the weekend by Gov. Dannel P. Malloy and legislative Democrats is not gimmick-free, no matter what the deal-makers say.

The still-unfinished draft budget has its share of smoke and mirrors. It would, for example, raise taxes despite Mr. Malloy's refusal to admit it — not through new taxes or big-ticket increases in the income- or sales-tax rates, but by the extension of some taxes that were supposed to be phased out.

Despite a chorus of criticism from the General Assembly's minority Republicans, however, such gimmicks can be tolerable in tough times, so long as the tax extensions are rarely used and can be quickly retired.

Also, much has been made — by Republicans — of Mr. Malloy's proposal to exclude spending related to programs that are 100 percent funded by the federal government from the state's spending cap. The spending cap is there as a check, a caution light, on state spending.

According to a recent study by Connecticut Voices for Children, current law penalizes the state for seeking new federal dollars because the cap would treat the expenditure of these dollars as state funds, even though they constitute federal spending through the state budget.

This is one reason the state gets back only 67 cents for every dollar it sends to Washington.

That should change. It makes no sense to include funds that are 100 percent federal under the state spending cap.

Beware The Auction

An area that legislators should approach with great caution is the proposed auction of standard service customers from Connecticut Light & Power and United Illuminating. The standard offer is the rate offered by the major utilities and is used by more than half of their customers. The idea of auctioning these customers for a one-time fix of $80 million or more is problematic.

First, it is another tax. Who are they kidding? If a utility company pays that money, it will want to recoup it from the ratepayers. If it quacks like a tax, it's a tax.

Second, according to Consumer Counsel Elin Swanson Katz and others, standard service is a reliable, affordable and high-quality product and a benchmark that keeps the rest of the market connected to fundamentals. Over time, it could well keep prices down; at the very least, it's a choice consumers should have.

Republicans Can't Complain

The governor and legislature are staring at billion-dollar deficits in each year of the biennial budget that takes effect on July 1. Bridging that gap between revenue and expenses with nothing but spending cuts would hurt many of Connecticut's most vulnerable residents.

Mr. Malloy and the Democrats, to their credit, did not employ two big gimmicks to balance the budget used by both parties in the past: They are not offering early retirements, which do not save money, and they are making contributions to the pension plan. Underfunding the state employee pension fund was a popular budget gimmick that has placed Connecticut deep into a hole. Mr. Malloy has wisely said "no" to that.

The Republicans would have been more effective if they had submitted their own budget plan rather than simply taking potshots at the draft Democratic proposal. For the first time in six years, they didn't offer their own taxing and spending ideas, leaving little room to credibly complain.

When lawmakers put the finishing touches on the budget and present it to Mr. Malloy, it should be a budget that protects the social safety net and, as much as possible, municipal aid. It should adequately fund Mr. Malloy's top-priority school reform effort.

And it should begin implementing the money-saving ideas of the Municipal Opportunities & Regional Entities Commission. The cost of government will decrease if these savings are ever unlocked.