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Business As Usual

Old Tricks: The State Budget, Once Again, Is Balanced With A Volatile Surplus And Gimmicks

Hartford Courant Editorial

June 04, 2011

All along, Gov. Dannel P. Malloy has insisted that he put together an honest budget that restores Connecticut state government to fiscal stability. For the most part, he has done so.

But with the plan to bridge the final bit of the gap in next year's $19.8 billion budget, we're not so sure.

State government will be stable only after it has been cut back to an affordable, sustainable size. But Mr. Malloy and fellow Democrats who control the General Assembly have passed up a platinum opportunity to cut more spending in closing a $400 million budget gap.

That's the amount of deficit left in the budget after a tentative agreement was struck with union leaders for $1.6 billion in concessions and savings, rather than the $2 billion that Mr. Malloy had hoped for. He has threatened thousands of layoffs if the union rank-and-file reject the agreement.

Unfortunately, they might take this budget-gap solution as a signal that Mr. Malloy doesn't always practice what he preaches.

NO SPENDING CUTS

Mr. Malloy and legislative leadership are taking the easy way out on fixing this final budget hole, just as a succession of free-spending governors and lawmakers of both parties have done while driving the state into the fiscal ditch.

Instead of significantly reducing the size of government by cutting $400 million in spending, they are proposing $80 million in savings and using $320 million in newfound money - a surge in income, corporate and other taxes - to fill the hole.

The $80 million in savings comes not from cuts to programs but from lower estimated contributions to retiree health care.

Mr. Malloy is going into the next fiscal year with almost no room for error. His $20 billion budget is within a whisper of the constitutional spending cap. The cap, passed in 1991, was meant to keep state spending increases in line with growth in personal income. He exceeds the cap at his political peril.

GOP leaders have been quick to criticize, claiming that Mr. Malloy promised to close the $400 million gap by cutting spending. Budget director Ben Barnes said the governor made no such pledge. "He said the $400 million gap would be made up with a mix of spending cuts and revised revenue estimates."

Some mix: Only 20 percent in reduced spending. No program cuts.

If Mr. Malloy didn't promise to close the $400 million gap by cutting spending, he should have done so. Surplus tax revenue, thanks to a slowly recovering economy, should be used to fill the Rainy Day Fund, pay down debt and institute Generally Accepted Accounting Principles instead of the usual state accounting tricks that hide the true depth of its financial problems.

A surplus should not be used as a cushion to allow spending at current levels, let alone spending increases.

GAAP Postponed

The transition to Generally Accepted Accounting Principles will have to be put off for two years - and this was the first thing put in motion by Mr. Malloy when he became governor five months ago. Suddenly, GAAP is on the back burner.

"We have a governor who says one thing and does another," says Larry Cafero, the House minority leader. It looks like Mr. Cafero is right. How disappointing.