Connecticut state budget (2008-2009)

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State Information


Connecticut ended FY 2009 on June 30, 2009 with a $926 million deficit and expected a $500 million deficit for FY 2010, according to Connecticut State Comptroller Nancy Wyman.[1][2] Gov. M. Jodi Rell and the Connecticut General Assembly continued to be at odds over the FY 2010 budget after its passage on September 1, 2009.[3]

The Connecticut General Assembly met in regular session from January 7 to June 3, 2009.[4] They reconvened on June 19, 2009 and passed a revised FY 2010 budget on June 26, 2009. The governor vetoed their budget on July 1. Gov. Rell signed an executive order providing funding for state agencies and essential programs in the absence of having a budget from July 1. The General Assembly passed another budget on September 1, 2009 for FY 2010.[5]

Gov. Rell’s veto of the budget on July 1 was based on her objection to raising the state’s individual income tax from 5% to 7.5%.[6] Gov. Rell neither signed nor vetoed the September 1 budget sent from the General Assembly, which allowed it to go into effect after fivve days. She proposed a line-item veto of $8 million in earmarks attached to it, but the Connecticut Attorney General opined that the governor could not line-item veto portions of a bill she did not sign.[7] The central issue to the stalemate was over new taxes to balance the budget. Gov. Rell pointed out the first budget in April had $3.3 billion in new taxes and that her resistance resulted in the smaller figure of $900 million in new taxes in the September 1 budget, which she refused to sign.[8]

In early February 2009 Gov. M. Jodi Rell announced that the state of Connecticut was facing a deficit of $1.35 billion for the current fiscal year. This deficit, she said, was going to cause "painful" budget cuts but added that she would not propose raising taxes during a recession. According to the fiscal office, the state was expected to be $3.97 billion in deficit in the fiscal year that began July 1 and $4.71 billion the following year.[9] Connecticut Senate president pro tempore Donald Williams said that whether it was budget cuts or raising taxes, "Neither solution was beneficial to the Connecticut economy. Either side of the equation was harmful."[9]

Impact of budget woes

See also: State budget crisis, 2009-2010
  • In December, Connecticut's unemployment rate hit 7.1 percent, compared to the less than 5 percent rate a year prior.[10] An average of 8,100 new claims had been filed per week, but in the week ending January 10, 2009, the average jumped to 13,000.[11]
  • On February 26, 2009, the Senate and House unanimously approved a $1.2 billion deficit cutting package. The bill had yet to be signed by the governor; however, the bill called for cuts across the board and no tax increases.[12]
  • The FY 2010-11 budget bill included a proposal to eliminate meal allowances for non-union state police officers would be cut, a request for $50 million in contract cancellations from the executive branch, expansion of the state's nickel deposit program for water bottles and calls for the creation of a new commission to consider potential mergers of certain state agencies for long-term savings.[12]
  • According to the deficit-cutting budget bill, commissions paid to state lottery agents would be reduced from 5 percent to 4 percent of an agent's lottery sales.[13]

Budget background

See also: Connecticut state budget and finances

Prior to the 1971-1972 fiscal year Connecticut used a biennial schedule for both the budget and the legislature. From the 1980s through the 1990s Connecticut began operating with an annual budget and legislature. However, during the 1993-1994 fiscal year Connecticut reverted to the biennial budget that reflects two years at a time. The fiscal year begins on July 1 of an odd year and ends June 30 of the next odd year (for example, July 1, 2009 to June 30, 2011).[14]
Once the state's agencies submit their budget requests for the upcoming biennium, the governor or governor-elect reviews, revises and makes any necessary additions before submitting the budget recommendation to the legislature on the first session day following February 14 in odd-numbered years. During even-numbered years the governor submits a report to the legislature on the status of the enacted budget along with any recommendations for revisions and adjustments.[14]

Budget figures

The following table provides a history of Connecticut's expenditures and gross domestic product (GDP).

Fiscal year Expenditures (billions) GDP (billions)
2000 $24.0[15] $160.4[15]
2001 $25.8[15] $165.0[15]
2002 $27.6[15] $166.1[15]
2003 $28.2[15] $169.9[15]
2004 $28.8[15] $182.1[15]
2005 $29.6[15] $193.3[15]
2006 $31.5[15] $205.0[15]
2007 $33.4[15] $216.3[15]
2008 $35.4[15] $228.2[15]
2009 $37.6*[15] $240.8*[15]
  • NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.

Ideas about why the crisis occurred


Gov. M. Jodi Rell 2009 State of the State address
  • Revenue from the state income tax was estimated at $1 billion lower than first projected, the sales tax was down by $386 million and real estate conveyance taxes were $109 million less than expected. Home sales and prices dropped causing a decrease in expected revenue.[9][16]
  • Approximately 1,057 single-family homes were on sale in January 2009, a 36.1 percent decline from 1,654 in January 2008. The median selling price for single-family homes statewide fell 17.1 percent to $223,000 from $269,000. According to The Warren Group, these were the lowest number of sales for single-family homes in 21 years for the month of January.[17]
  • While some legislators were calling for furloughs or layoffs, some Connecticut residents questioned the salaries of some of Connecticut's public employees, including University of Connecticut basketball coach Jim Calhoun, who had a salary of $1,618,655.44. Calhoun, football coach Randy Edsall, whose salary was $1,380,569, and women’s basketball coach Geno Auriemma, whose salary was $1,309,426.44, were three of the highest paid public employees of the state of Connecticut.[18][19]

Proposed actions

Governor M. Jodi Rell

Despite the state legislature unanimously passing a deficit-cutting budget bill in February, Gov. Rell said that she was not certain whether she would sign it. On February 19, Gov. Rell proposed her own deficit-cutting bill, which she said would put money back in resident's pockets.[20] Rell said that an important step that needed to be taken was the restructuring of government in order to balance the budget and minimize excessive spending. Rell also suggested the use of the Rainy Day Fund, which had been untouched since 2002. “I make no apologies for using the one-time revenue,” she said. “It’s raining right now, and I’m not afraid to use it.”[20][21]

Republicans

Like Gov. Rell, Republicans supported budget cuts and did not support the increase of taxes. In early February, House and Senate Republicans unveiled their own budget proposal. "There was overwhelming public support for Gov. Rell and her proposal to balance the state budget by reducing spending and rejecting tax increases, but the Democrats’ failure to responsibly address the FY09 deficit will effectively render her proposal dead on arrival,” said Rep. Lawrence Cafero.[22] The Republicans' proposal suggested changing the effective date of budget cuts from July 1 to April 1, use of $280 million of the state's $1.4 billion rainy day fund and an eight-day furlough for state employees that would save approximately $29.6 million.[22]

Democrats

Democrats across the state said that they were wary of Gov. Rell's budget deficit projections and estimated that larger cuts were needed in order to balance the budget and that the deficit was greater than projected. “The public needs to be scared straight,” House Speaker Christopher Donovan said. “The people of Connecticut need to see a clear picture. They deserve it and expect it.” The plan, they said, made no cuts to the Education Cost Sharing program, the single-largest grant to cities and towns. Democrats in February noted that in order to balance the budget nearly twice the number of recommended cuts were necessary, especially if taxes weren't going to be increased.[23] In mid-February Democrats said that $200 million could be cut from the state's off-budget funds and accounts. Approximately $1.6 billion were estimated in the off-budget funds. However, Robert Genuario, the governor's budget director, said the funds were not pools of hidden cash. Some were large bond funds that financed public school construction and purchases of open space and couldn't be used for other purposes.[24]

Use taxes to raise revenue

In light of the state's budget deficit a coalition of community groups merged in early 2009 to form "Better Choices for Connecticut" and created a budget proposal of their own. Contrary to Gov. Rell's statement that budget cuts were the way to solve the state's budget crisis and that she would not consider raising taxes, Jeffrey Tebbs, a Yale law student, said, "Slashing services across the board is unconscionable.”[25] The coalition of nonprofit providers, public service workers, two Yale law school students, a Yale law school professor and community groups proposed increasing the income tax on those making $200,000 or more per year, capping the state's film tax credit program, eliminating corporate tax loopholes, increasing the sales tax by one percentage point and increasing taxes on alcohol and tobacco. “If you take a look at the work of Nobel-winning economists, they say placing taxes on those at the highest end is the most efficient way to close a budget gap,” said Doug Hall, the acting managing director of Connecticut Voices for Children.[25][26] The proposed budget included the use of the Rainy Day Fund and the federal Economic Stimulus Package; however, the grand total for the proposed budget amounted to $2.9 billion, 60 percent of which were increases in revenue.[27]

Economic stimulus package

Connecticut was expected to receive approximately $3 billion from the $787 billion economic stimulus package.[28] According to White House officials, the stimulus bill was estimated to create or save 41,000 jobs.[29]

According to preliminary reports Connecticut was expected to receive:[28][30][31]

  • $1.3 billion for health care costs
  • $84 million to modernize the unemployment insurance system
  • $29 million for worker retraining and employment services
  • $487.5 million for infrastructure projects
  • $302 million for rebuilding and improving roads and bridges
  • $137.5 million for transit formula funding
  • $36 million in public housing capital funds
  • $11 million in Community Development Block Grant funds
  • $19.7 million for the Drinking Water State Revolving Fund
  • $48.8 million for the Clean Water State Revolving Fund for clean water and waste water projects
  • $5 million for the Head Start program
  • $80 million in stabilization funds for public safety
  • $443.5 million in state stabilization funds for education

Budget transparency

As of 2009, Connecticut had no statewide, official spending database online.

Economic stimulus transparency

  • The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[32]
  • It was estimated that Connecticut would receive at least $1.8 billion in federal funding.[33]

Legislation

See also: Connecticut transparency legislation
  • House Bill 5954 proposed to establish a government transparency website to enable the public to track state spending and to promote transparency.[34]
  • House Bill 5959 proposed to require that the Office of Policy and Management and the Office of Fiscal Analysis each post the state budget on their respective web sites.[35]
  • House Bill 5962 proposed to establish a searchable online database of state expenditures.[36]
  • Senate Bill 340 sought to enable easier public examination of all state contracts.[37]
  • Senate Bill 521 sought to require full disclosure and transparency in state contracting.[38]
  • Senate Bill 523 sought to establish a state website tracking the awarding of state grants and contracts.[39]

These bills had been referred to the Joint Committee on Government Administration and Elections. Another transparency bill, HB 5097, which sought to provide online access to the state budget, had been referred to the Appropriations Committee.

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State database Searchability Grants Contracts Line item expenditures Dept./agency budgets Public employee salary Exemption level
None n/a n/a n/a n/a n/a n/a n/a

Support for creation of the database

The National Taxpayers Union and Citizens Against Government Waste urged Connecticut's government officials to create a spending database.[40]


Public employee salary information

See also: Connecticut state government salary

See also

External links

Additional Reading

References

  1. Connecticut State Comptroller Press Release, “Wymann Says State Ends Fiscal Year with $925.9 Million Deficit,” September 1, 2009
  2. Connecticut State Comptroller Press Release, “Wymann Says Revenue Trends Indicate Deficit Likely for 2010,” October 1, 2009
  3. Brian Lockhart Blog, “Look up ‘limbo’ in the dictionary and you’ll find ‘Connecticut state budget.’ See also ‘disaster’/'insanity’,” September 25, 2009
  4. Connecticut General Assembly Web site, accessed October 12, 2009
  5. National Conference of State Legislatures, “Fiscal Year 2010 Budget Status,” October 1, 2009
  6. The Heartland Institute, “States Struggle to Start Fiscal Year,” September 1, 2009
  7. Connecticut Department of Developmental Services, “DDS Budget Update,” September 8, 2009
  8. Gov. M. Jodi Rell Press Release, “Governor Rell: Budget Will Become Law Without Her Signature – and Without Pork-Barrel Spending,” September 1, 2009
  9. 9.0 9.1 9.2 The Hartford Courant, "Rell warns of cuts as budget deficit grows," February 3,2009
  10. Connecticut Department of Labor, "Unemployment rate," accessed February 26,2009
  11. Norwich Bulletin, "Jobless claims overwhelm staff," February 15,2009
  12. 12.0 12.1 The Day, "Deficit-cutting bill approved by General Assembly," February 26,2009
  13. Associated Press, "Lawmakers pass third deficit-cutting plan," February 26,2009
  14. 14.0 14.1 Connecticut Office of Fiscal Analysis, "State budget process," accessed February 26,2009 (dead link)
  15. 15.00 15.01 15.02 15.03 15.04 15.05 15.06 15.07 15.08 15.09 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 US Government Spending, "Connecticut State and Local spending," accessed February 26,2009
  16. Reuters, "Connecticut gov. revises deficit f'cast to $944 mln," February 20,2009
  17. Hartford Business, "CT home sales sink in January," accessed February 26,2009
  18. MSNBC, "Find out who make the state's biggest buck," February 26,2009
  19. WTVD, "No salary cuts for top employees," February 26,2009
  20. 20.0 20.1 Yale Daily news, "Rell discuses budget," February 25,2009
  21. Connecticut Office of Policy and Management, "Governor's Budget FY 2010-11," February 4,2009
  22. 22.0 22.1 WFSB, "Republicans' proposal includes furloughs," February 11,2009
  23. Journal Inquirer, "Dems offer to show balanced budget without tax hikes," February 20,2009
  24. Associated Press, "Conn. Democrats propose tapping little-known funds," February 24,2009
  25. 25.0 25.1 Yale Daily News, "Elis propose alternative Connecticut budget," February 4,2009
  26. Better Choices for Connecticut, "State budget proposal," February 2,2009
  27. CT News Junkie, "Coalition To Rell: don’t cut spending, raise revenue," February 3,2009
  28. 28.0 28.1 The Bridgeport News, "City seeks its share of federal stimulus," February 24,2009 (timed out)
  29. The Advocate, "Connecticut needs the American Recovery and Reinvestment Act," February 25,2009 (dead link)
  30. The New London Times, "At the Capitol - awaiting the stimulus details," February 26,2009 (dead link)
  31. Norwalk Plus, "Funding for Connecticut announced in economic recovery plan," February 13,2009
  32. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  33. Wall Street Journal, "Stimulus Spending by State"
  34. Text & Status of HB5954
  35. Text & Status of HB5959
  36. Text & Status of HB5962
  37. Text & Status of SB340
  38. Text & Status of SB521
  39. Text & Status of SB523
  40. National Taxpayers Union, "Taxpayers Support Creating Spending Database in Connecticut," April 11, 2007