2013 State Budget – An Open Door Can Work Wonders

A state budget is an administration or a majority of legislators’ policy statement; a roadmap if you will, on the direction it wants to take the state. For some of us, that road is leading us in reverse.  Connecticut’s unemployment rate remains at 8%, higher than the national average of 7.6% and New England at 6.8%.

The State Department of Labor reports that Connecticut has gained 58,600 jobs lost during the recession, slightly less than a 50 percent recovery, much lower than the 72 percent job recovery seen nationally.  Finance and insurance jobs and wages are contracting and more so in the manufacturing industry.

Chief economist Don Klepper-Smith of DataCore Partners LLC said, "The state's economy has been moving sideways.  The lack of progress in the state's economy is starting to 'wear thin' for many. There are 30,000 fewer people in the states labor market today from just one year ago.”

The state’s new budget ensures that Connecticut will continue to be last in the country in economic recovery and income growth.

The budget passed by the majority party will spend nearly 10% more over the next two years; will borrow some $750 million to pay for operating expenses and taxes residents an estimated $315 million more. Connecticut’s commuters face the largest gas tax hike in the state’s history on July 1, 2013. This is a staggering figure considering the largest retroactive tax increase in the state’s history was enacted two years ago.

We need fiscal policies that will move Connecticut ahead, not backward.  What we need are policies that will streamline government and reduce costs such as moving new hires to defined contribution 401(k) plans, or provide services for our most vulnerable citizens by utilizing the non-profit community for a fraction of the cost with arguably better care. State government can also privatize services like the Department of Motor Vehicles. How many people go to the local AAA office to renew their driver’s license? It is faster.

These and many other proposals were shared but not seriously considered.

There were, however, some positive developments in early childhood programs, education investment, reading instruction improvements and higher education governance reforms.

I was also able to garner bipartisan approval to implement a new academic advancement program that will allow high school juniors to test out of their senior year and advance more quickly to college or the workplace.  The Budget flat funds the Education Cost Sharing money (ECS) for most towns in the region. Bethel will see a $7,852 dollar increase over FY-2013-2014. 

We were also able to pass legislation that will direct money from the Special Transportation Fund (STF) to go towards rail improvements and prohibit the raiding of future STF money. The swiping of nearly $100 million from the STF has been a regular practice for the last several years.  Unfortunately, raising funds to pay for overspending have not only affected the STF, but also the Banking Fund, the Tobacco fund, the Probate Court fund, and the Connecticut Energy Fund.  Other changes include:

•           Gas tax increases $.04 a gallon on July 1and energy costs will go up by $2 a month per household. The additional money will be swiped for the general fund.

•           10 percent surcharge on the corporations tax slated to sunset will remain on the books

•           Those 65 or older will pay $2 more to renew a two-year license.

•           Drivers will pay $7 more to renew drivers’ licenses. A six-year renewal will now cost $72. And, a commercial driver's license will increase by $10.

Gambling was also expanded by the addition of Keno, adding $3.8 million in 2013 and then $27 million in 2014 to the budget. In my view, this is a very unwise policy decision. Just as the promised savings of $180 million from the state employee suggestion box, this new revenue source may come up short.

An open door approach can work wonders in solving the state’s budget problems. A shut door only widens its financial and political gap.