Connecticut state budget (2009-2010)

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Connecticut's two-year, $37.6 billion state budget, of which FY 2011 was the second year, was adopted in September 2009 and lawmakers intentionally left a $1.3 billion shortfall in the second fiscal year.[1] FY 2011 was the second year of the state's biennial budget, with the budget for FY 2011 amounting to $19.1 billion.[2] The state faced a budget deficit of $3.4 billion.[3]

Since 1980, state spending had risen from $4,400 per household to $10,000 per household, an increase of 227%.[4]

Connecticut had a total state debt of $65,213,378,749 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap.[5]

2011 state spending and deficit in billions[6]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$26.1 $2.9 $7.2 $4.0 $3.5 $1.8 $2.0 $30.2
2011 local spending and deficit in billions[6]
Total spending Pension Healthcare Education Welfare Protection Transport Deficit
$21.3 $0.5 $0.1 $8.4 $0.8 $1.3 $0.9 $10

State budget for FY 2011

In December 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $86 million, which represented 0.5% of the FY 2011 state budget.[7]

State Treasurer Denise L. Nappier said in December 2010 that revenues from unclaimed properties should reach $92 million in FY 2011, $42 million above the level originally projected in the $19.01 billion state budget.[8]

Seven weeks into FY 2011 Gov. Rell predicted that the state would face a budget shortfall of $63.4 million.[2] The state had an approximately $18 million deficit in the state budget, in part due to an increased number of people cashing in on unclaimed property.[9]

FY 2011 was the second year of the state's biennial budget, with the budget for FY 2011 amounting to $19.1 billion.[2] The two-year, $37.6 billion state budget, of which FY2011 was the second year, passed in September 2009 intentionally left a $1.3 billion shortfall in the second fiscal year. A $700 million deficit developed since the budget was enacted in September.[10]

Gov. Rell signed the $19 billion FY 2011 budget, Senate Bill 494, on May 7, 2010, two days after the legislature adjourned.[10] The budget cut spending by state agencies by $163.4 million and lowered interest expenses by more than 50 percent: $133.5 million over eight years versus $300.6 million over 10 years.[10] Under the budget agreement, a plan to borrow $989 million through Economic Recovery Revenue Bonds replaced the $1.3 billion in “securitization” called for in the last year's budget, which became law without Governor Rell’s signature. These bonds had shorter terms (eight years versus 10 years) and lower interest rates (3 percent versus 4 percent), resulting in a net savings.[10] Such borrowing balanced the budget, and left a projected $3.4 billion deficit for 2011-12.[11] The plan used 34% of an existing charge that appeared on monthly electric bills that was set to expire to repay the bonds. Instead the charge disappearing from customer's bills, the average household's charge would drop from $7.50 to $2.50 per month.[10]

The debt per capita was $4,859, the highest in the nation.[12]

Federal stimulus funds

Although the state received less than lawmakers had hoped for from the August 2010 federal stimulus, officials said that the federal funds would enable the state to avoid a deficit.[13]

The state's portion of the August 2010 state bailout would translate into approximately $110 million for education and $199 million for Medicaid.[13] The governor's office said that the state would receive $193.4 million less in federal Medicaid and education funding than it had anticipated.[2]

State budget FY 2010

According to State Comptroller Nancy Wyman, the projected FY 2010 budget surplus was at $393.3 million.[14]

Connecticut’s general fund budget for FY 2010 was $17.375 billion and $17.591 billion for FY 2011. The budget package included transfers of $1 billion in FY '10 and $319.7 million in FY '11 from the budget reserve fund (BRF) to the resources of the general fund.[15]

On April 1, 2010, State Comptroller Nancy Wyman informed Gov. Jodi Rell that the state's Office of Policy and Management (OPM) had projected a fiscal year 2010 general fund budget deficit of $356.5 million, but that she projected the deficit to be $371 million.[16] Comptroller Wyman cited income tax projections as the reason for the difference.[16] She also projected that general fund revenues would fall $357.4 million short of budget projections, with the two largest shortfalls in the categories of income tax, which would be $222.2 million short, and sales tax, which was short of budget projections by $90.6 million.[16]

Comptroller Wyman stated that the governor's deficit mitigation plan had reduced the deficit by nearly $150 million.[16] The first component deferred a $100 million contribution to the State Employees’ Retirement System. This deferral shifted the payment obligation forward requiring higher contribution levels in future fiscal years. The second item was $47.4 million in Medicaid savings due to a change in the administration of federal stimulus money that would result in lower state payments or “claw backs” relative to Medicare Part D.[16]

Comptroller Wyman stated that much of that governor's first plan was not implemented and the current deficit triggered the requirement for a second mitigation plan.[16] Gov. Rell's plan included a 3.25% hospital tax, as well as more than $170 million in spending cuts, many of which impacted education and social services programs.[16] It was considered by lawmakers.[17]

Budget background

See also: Connecticut state budget

Connecticut’s general fund had surpluses in the amount of $302.2 million in FY '04; $363.9 million in FY '05; $446.5 million in FY '06; and $269.2 million in FY '07, each contributing toward a total budget reserve fund (BRF) balance of $1,381.8 million.

The Connecticut legislature in 2009 passed some cost savings measures that included:[18]

  • Reduction in personnel costs by $701.9 million over three years
  • Salary wage freezes
  • Mandatory furlough days
  • Employee retirement incentive
  • Increased employee health insurance contributions
  • New employee contributions to fund retiree health care

The Connecticut General Assembly meets annually, but sets its budget cycle biennially. Once the state's agencies submit their budget requests for the upcoming biennium the governor reviews, revises and make 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.[19]

Accounting principles

See also: Connecticut government accounting principles

Hours after being sworn into office, Governor Dannel Malloy signed an executive order mandating that the state transition into Generally Accepted Accounting Principles.[20]

The Connecticut Auditors of Public Accounts is under the direction of two state auditors appointed by the state legislature; having two auditors is unique among the states. Their reports are published online.[21]

Credit rating Fitch Moody's S&P
Connecticut[22] AA Aa3 AA

Economic stimulus package

Connecticut was expected to receive approximately $3 billion from the $787 billion economic stimulus package.[23] According to White House officials, the stimulus bill was estimated to create or save 41,000 jobs.[24]

According to preliminary reports, Connecticut was expected to receive:[23][25][26]

  • $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

See also: Evaluation of Connecticut state website

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

Economic stimulus transparency

Efforts to track spending of the American Recovery and Reinvestment Act had been difficult for the federal government, who were unable to account for the $8.3 million spent between December and March 2010.[27] Some of the funding was even spent in other states, like California, and one project sent money to Spain.[27] Overall, nine programs had not reported their spending. Milford-based Gas Equipment Engineering Corporation, the largest grant of the non-reporters, received $1.2 million from the Department of Energy.[28]

  • The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[29]
  • It was estimated that Connecticut would receive at least $1.8 billion in federal funding.[30] The state spent $125,000 of these funds promoting the spending and projects it created with the funding.[31]

Four Connecitcut projects were noted in Senator Coburn's and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. One project gave the Mohegan Tribe of Indians of Connecticut $54 million in rural development loans from the United States Department of Agriculture to construct a new four-story tribal government center, which would include both a new community center and a WNBA practice center.[32] Another project utilized $184,650 of stimulus funds to refurbish what local media described as “an old garage” into an art studio for artists participating in the Weir Farm’s “Artist-in- Residence” program. Whether there would be public access had not yet been determined in August 2010.[32]

Error in ARRP

According to Recovery.gov, funds were going to 884 congressional districts, though there are only 435.[33][34]

According to the ARRP website, there was job growth in the fictitious 42nd District. There were 25 jobs created there, despite receiving zero stimulus dollars.[35]

Legislation

See also: Connecticut transparency legislation
  • House Bill 5954 would establish a government transparency website to enable the public to track state spending and to promote transparency.[36]
  • House Bill 5959 would require the Office of Policy and Management and the Office of Fiscal Analysis each post the state budget on their respective web sites.[37]
  • House Bill 5962 would establish a searchable online database of state expenditures.[38]
  • Senate Bill 340 sought to enable easier public examination of all state contracts.[39]
  • Senate Bill 521 would require full disclosure and transparency in state contracting.[40]
  • Senate Bill 523 would establish a state website tracking the award of state grants and contracts.[41]

These bills had been referred to the Joint Committee on Government Administration and Elections. Another transparency bill, HB 5097, which would 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
None n/a n/a n/a n/a n/a n/a
  • The site was not searchable for spending items. Budget plans were not searchable.[42]
  • Grants were not posted.
  • Contracts were posted.[43]
  • Line item expenditures were not available.
  • Department budgets were not available.
  • Public employee salaries were not available.

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.[44]

Public employee salary information

See also: Connecticut state government salary

See also

External links

Additional reading

References

  1. Business Week "Conn. gov unveils new plan to fill budget hole" April 29, 2010
  2. 2.0 2.1 2.2 2.3 The Connecticut Mirror "State budget falls $63.4M into the red as federal aid comes up short" Aug. 20, 2010
  3. Businessweek "Rell staff working on ideas for new Conn. governor" Aug. 19, 2010
  4. The Hartford Courant "Balancing Acts: What Can Be Cut From State Spending?" Nov. 14, 2010
  5. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  6. 6.0 6.1 USA Spending, State Guesstimated* Government Spending
  7. The Wall Street Journal “States Face Budget Shortfalls of $26.7 Billion“ Dec. 8, 2010
  8. The Connecticut Mirror "Unclaimed properties give state budget a holiday boost" Dec. 17, 2010
  9. NBC Connecticut "Unclaimed property refunds sock state budget" Dec. 1, 2010
  10. 10.0 10.1 10.2 10.3 10.4 The New Haven Register "Rell signs $19B Conn. budget bill into law" May 7, 2010
  11. TheDay.com "Outrageous budget assures grim days ahead" May 9, 2010
  12. New Mexico Watchdog, Debt in the Four Corners? We’re No. 1!, Aug. 3, 2010
  13. 13.0 13.1 The Connecticut Mirror "Congress passes aid bill vital to Connecticut's budget" Aug. 10, 2010
  14. The Hartford Courant "State's Budget Surplus Was Better Than First Projected; Sales Tax Increases Unexpectedly In Slow Economic Rebound" Aug. 3, 2010
  15. Connecticut Legislative Office of Fiscal Analysis, “Fiscal Note for H.B. 6802”
  16. 16.0 16.1 16.2 16.3 16.4 16.5 16.6 Connecticut Mirror Letter from Comptroller Wyman to Gov. Rell April 1, 2010
  17. Connecticut Mirror "Legislature's Democrats reach tentative agreement to balance 2010 budget" April 9, 2010
  18. Connecticut General Assembly, Office of Legislative Research, “OLR Major Acts,” November 12, 2009
  19. A Guide to Connecticut's State Budget
  20. NBCConnecticut.com "Malloy Signs 3 Executive Orders, Including on Rell E-Mails" Jan. 5, 2010
  21. Connecticut Auditors of Public Accounts Web site, retrieved October 12, 2009
  22. California State Treasurer, “Comparison of Other States’ General Obligation Bond Ratings”
  23. 23.0 23.1 Waste or windfall? $787 billion in stimulus funding, October 03, 2010
  24. staterecovery.org, Connecticut
  25. The New London Times,"At the Capitol - awaiting the stimulus details," February 26,2009
  26. Norwalk Plus,"Funding for Connecticut announced in economic recovery plan," February 13,2009
  27. 27.0 27.1 Watchdog, Stimulus money in Connecticut overstated, some heads to Spain via UConn, July 22, 2010
  28. Watchdog, Nine stimulus grant recipients in Conn fail to report on spending $4.4 million, July 27, 2010
  29. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  30. Wall Street Journal, "Stimulus Spending by State"
  31. Watchdog, Connecticut spends $125,000 advertising stimulus funding, Sept. 14, 2010
  32. 32.0 32.1 "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  33. $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
  34. Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
  35. Connecticut, Watchdog.org, November 17, 2009
  36. Text & Status of HB5954
  37. Text & Status of HB5959
  38. Text & Status of HB5962
  39. Text & Status of SB340
  40. Text & Status of SB521
  41. Text & Status of SB523
  42. Governor Rell offers third budget proposal
  43. The Office of Labor Relations - Contracts
  44. National Taxpayers Union, "Taxpayers Support Creating Spending Database in Connecticut," April 11, 2007