Turns out our budget is not a magical cure-all. Then again, we sorta knew that. Our state needs to undo at least 50 years of mismanagement and then some. So, to those genuinely surprised that our bipartisan budget doesn’t come with a magical wand… wake up.
CT Mirror reports that critics already discovered red ink tucked neatly into the budget. However, with the state’s eroding sales and income tax base, it’s not that all surprising.
We’ll see this fiscal year end with a $175 million deficit. By next year, the deficit will increase by an additional $150 million. Overall, these two combined amounts far outweigh what currently sits in the state’s Rainy Day Fund.
If you wanted to know, it’s $213 million.
But, the most concerning thing is: a healthy rainy day fund needs to be 12x that amount. Then again, blame our state’s penchant for raiding funds for that. Hey, after years of draining every fund the state has: it finally bit us in the butt just like we said it would.
The pension fund says hello.
Oh, yes, we also keep paying off our previous debt from when we borrowed $1 billion in 2009. You know, the last time we completely drained our Rainy Day fund? Yeah, we needed a bail out. Forgot that little nugget of information, didn’t you?
Don’t worry, I forgot too. There’s too many moving parts in our state’s fiscal sob story even I lost track.
Anyways, we finally cross that repayment off our “to do” list in January.
Long story short, should the state end the next fiscal year $175 million in the red, Governor Malloy will need to draft a deficit-mitigation plan. Basically, law requires a plan in place whenever a state’s deficit exceeds 1 percent of the General Fund.
However, the deficit might rise considering it relies in heavy cuts to state spending, something our governor isn’t too keen on. Instead, he says operating on such cuts will be difficult.
Schools saw reduced funding while lawmakers tightened down on requirements for residents to access cost-saving programs, like for healthcare and utilities.
On top of that, whoever inherits his office will basically inherit a fiscal nightmare. By the time he leaves office, the state deficit might reach $3.5 billion… with some projections saying closer to $5 billion. So, keep that in mind when you cast your ballots next year.
We should definitely know for sure how much in the red we are by next week when the official report heads to the state comptroller.
Again, this crippled financial outlook is all because of our exodus problem. With more taxpaying residents and businesses flying the coop, they take their income tax payments with them. Already, lawmakers say the state will see $70 million less by 2020 in income tax receipts.
Plus, less people want to spend money since living in Connecticut is so expensive. Sales tax receipts look to drop $56 million by 2020.
And, we all know these two sources of funding happen to be our state’s favorite way to make money.
I know I’ve argued this until I went blue in the face, but how many times do we the people need to tell our lawmakers this until they understand we can’t bail them out of this mess. We already pay the most taxes out of all 50 states… so it’s pretty obvious raising taxes on us won’t work.
In fact, I think it’ll do the exact opposite.
And this bill, although a bit misguided, attempted to remedy that by cutting our state’s egregious spending.
The issue is, I don’t think our lawmakers know where to start anymore. They’re looking at a writhing mass of red ink, union promises, and unhappy constituents. They know the fate of Connecticut rests on their shoulders and, honestly, I wish their predecessors felt the same pressure.
But, as many chief economists said, Connecticut finally reached the point of no return. If things continue at the same pace, we will see another recession, which will only complicate our debt even further.
True, this budget does spurt some red ink, but it’s not nearly as awful as Governor Malloy’s proposals which would have drained municipalities dry. By just having them pay 30% of teacher pensions, a fund the state heartily raided back in the day, cities and towns would’ve capsized.
Our lawmakers also admitted the budget isn’t perfect:
“These numbers are disappointing but not unexpected. It’s clear that now is the time to give cooperation and collaboration a chance to build on the bipartisan budget passed into law last month, which makes important long term systemic reforms.Many of these structural changes may not result in an instantaneous change, but rather will begin the process to improve financial management and eliminate this type of volatility and unpredictability in the future. We will continue to examine this report, monitor these numbers closely and remain committed to working together to make adjustments to the budget if needed in the coming months.”
On top of that, lawmakers say Governor Malloy’s deal with the state unions further complicated the budget by reducing layoffs and maintaining benefits until 2027.
All in all, I think this budget we have was most definitely the lesser evil. Was it perfect? No, not by a long shot, but it can be a start for our lawmakers to get their act together and keep the state from falling apart at the seams.
Will it happen? We can only hope at this point. But, if you demanded a budget that would magically cure everything that ails Connecticut, you have serious optimism issues. And desperately need a reality check.
Anyways, what’s your prediction about where the state will go next? Is this budget good or bad for us? On top of that, what else should our lawmakers work on to really turn our state around?