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Connecticut state budget

The Connecticut state budget for FY2012-13 totals $40.54 billion, including a $20.14 billion component for FY2012 and $20.4 billion for FY2013.^[1] The FY2012-13 budget relied on a deal with unions that included concessions.^[2] After initially rejecting the deal, unions modified their voting rules and the unions approved the concessions necessary to balance the state budget in Aug. 2011.^[3]

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

Connecticut has a total state debt of approximately $99,751,294,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and FY2011 budget gap. ^[5]

See also: The Connecticut State Budget on State Budget Solutions

[edit] State Budget FY2012-13

The biennial budget totals $40.54 billion, including a $20.14 billion component for FY2012 and $20.4 billion for FY2013.^[1] It increases state spending from $19.3 billion in 2011 to $20.3 billion in 2013, approximately 4.5%.^[7] A $3.7 billion tax hike, the largest in the state's history, is also included.^[8] The FY2012 budget had been balanced, erasing an anticipated $3.44 billion deficit.^[9] The budget was balanced, however, with the assumption of union concessions, which the union ultimately rejected. The legislature will reconvene for a special session on June 30, 2011, to balance the budget.^[10]

As of April 2012, the state faced a $200 million deficit for FY2012 according to figures released by the legislative and executive budget offices. The change is due in large part to a $147 million drop in income tax receipts.^[11]

[edit] FY2013 Budget

On May 8, 2012, both the House and the Senate approved the same $20.5 billion budget for FY2013 that closes a projected $200 million deficit.^[12][13] The House approved the budget by a vote of 95-49, and the Senate voted 22-13 in favor.^[13] The budget is the result of a deal the Gov. Malloy negotiated with Democratic legislators.^[13] Highlights of the legislative budget include:^[12]

• increases overall state education spending for municipalities by $100 million;
• preventing bus fare hikes;
• creation of a new state office to promote affordable housing;
• funding cuts to agencies;
• delayed implementation of generally accepted accounting principles.

[edit] Deficit and Governor's Budget-Cutting Authority

The legislature's nonpartisan fiscal office announced on Jan. 25, 2012 that the state budget deficit has grown to a projected $144.5 million. Two months prior, the same office had projected a surplus of $100 million. The deficit stems from lower than anticipated tax revenues, despite recent tax hikes.^[14] The governor said that he did not agree with the fiscal office's calculation because it fails to include the funds in the salary adjustment account.^[15]

Gov. Dannel Malloy said on Jan. 24, 2012 that he planned to use his unilateral authority to make budget cuts of $78.7 million in order to keep the state in the black for the current fiscal year. Malloy is limited to reducing any line item by 5 percent.^[16] The list of cuts the governor wants to make include:

• $17,500 from the Department of Veterans Affairs' account for headstones,
• $2 million in personal services or staffing expenses at the Department of Developmental Services,
• $5.7 million from the judicial branch, and
• $800,000 from the the legislative branch.^[16]

Union concessions

The governor initially signed into law a two-year, $40.1 billion state budget with a $2 billion hole, $1 billion in each year of the budget which he intended to fill with concessions from the more than 46,000 unionized rank-and-file state employees.^[17] When unions and the governor could not reach an agreement on how to fill that $2 billion gap, on May 10, 2011, Gov. Malloy issued layoff notices to what he called "the first 4,742 state employees." ^[18] Days after the governor issued the layoff notices, the unions agreed to agreed to $1.6 billion in concessions. Four unions rejected the bill,^[19] The opposition focused on the deal's health care provisions, and also reflected the beliefs among some members that they could win a better package if they rejected this one, thinking that Malloy's layoff threats were not serious.^[10]

Unions amended their bylaws so that membership could ratify the concession deal with a simple majority vote in favor of doing so.^[20] Fifty-seven percent of union members approved the deal on the first vote, but at the time the bylaws required 80 percent approval.^[21] After the union rejected the deal, the governor recommended laying off nearly 5,500 state employee, eliminating 1,000 vacant positions and cutting municipal aid by $54 million cut to help offset the unrealized savings from the failed union concession deal.^[22] The unions voted to approve the deal on their second vote. Fourteen of 15 unions approved the deal. The governor said that the plan's lower health care and retirement costs for state workers saves taxpayers $21.5 billion over the next 20 years. After the results were announced, the State Employees Bargaining Agent Coalition wrote to the governor and requested that he rescind the layoff notices.^[23]

Budget Provisions

The Senate passed a final package of budget adjustments that plugged a $400 million hole in part by approval to a $1.6 billion union concession deal on June 7, 2011. The budget closed a projected deficit up to $3.67 billion with $1.52 billion in new state taxes and fees, $800 million in revenue growth, and spending that totals $1.36 billion less than the level originally projected to maintain current services.^[1]

The biennial state budget increases taxes approximately $3 billion for the next two years combined, the highest tax hikes in the state history. Increased taxes include:^[24]

• The sales tax will increase from 6 percent to 6.35 percent on retail items.^[25]
• The luxury tax will rise to 7 percent on cars worth more than $50,000, yachts selling for more than $100,000, jewelry for more than $5,000, and clothing items and wedding gowns selling for more than $1,000.^[25]
• Instituting the Amazon tax on online sales.^[25]
• The cigarette tax from $3.00 per pack to $3.40 per pack.^[24]

An income tax increase means residents now pay between 3 percent to 6.7 percent. It went in to effect on Aug. 1, 2011, and is retroactive to income earned since Jan. 1, 2011.^[26]

Some budget cuts that were part of the approved concessions included:^[27]

• $5.8 million by closing the Bergin Correctional Institution
• $280,000 by lessoning the cleaning frequency at state buildings
• $410,000 by reducing the operating hours at some state buildings
• $517,000 by shrinking computer contracts in state government
• $260,000 by converting boilers to low-density systems
• $108,000 by deferring the installation of a security alarm at the state police training academy

A budget deal between the governor and legislature was reached on April 20, 2011. The revised plan does not include some of the governor's planned tax increases, including some affecting the boating and car industries, but does includes $2 billion in labor savings that have not yet been agreed upon.^[28] Under the deal, the governor held the line on legislators' attempts to increase the top income tax rate beyond his proposed 6.7 percent, an increase over the prior year's 6.5%, but did agree to more people paying the top tax rate. In turn, lawmakers agreed to the governor's plan to win $1 billion in concessions from state employees in each of the next two fiscal years.

A lawsuit filed on May 7, 2011, in Hartford Superior Court asks to have the 2011-13 state budget signed by the governor declared "null and void" because it violates the 1992 law requiring a balanced budget and asks that the budget be returned to the legislature for further work.^[29]

[edit] Budget Negotiations

Legislative Proposed Budget

After Democrats reached a deal with Gov. Malloy, the Senate passed the $40.1 biennial state budget on May 3, 2011, with a vote of a 19-17 vote. Later that day, the House approved the plan with an 83-67 vote.^[30] making it the earliest budget in recent state history.^[25] A key portion of the approved budget, however, has yet to be specified: the $2 billion in labor savings assumed in the tax-and-spending plan has not yet been reached with state employee unions.^[30] The bill also creates $1 billion in surplus over the next two fiscal years, which the governor said can be used to replenish the state's Rainy Day Fund and to pay off debts.^[30]

The Senate agreed to not increase gas taxes, although Gov. Malloy had initially proposed a three cent per gallon increase in mid-February. Gas prices rose $0.32 in April 2011. The final budget package still raises most of the state's taxes. The sales tax will increase from 6 percent to 6.35 percent on retail items, the luxury tax will rise to 7 percent on cars worth more than $50,000, yachts selling for more than $100,000, jewelry for more than $5,000, and clothing items and wedding gowns selling for more than $1,000. The final budget also includes the Amazon tax on online sales.^[25] Overall, the budget raises taxes by $1.4 billion in the first year and $1.2 billion in the second year.^[30]

The Republican alternative budget presented April 18, 2011, differs from the governor's in that it does not raise taxes. The budget mirrors the governor's plan to squeeze $1 billion in concessions from labor, and it also preserves state aid to cities and towns, as the governor's budget does.^[31]

Governor's Proposed Budget

On April 4, 2011, Gov. Malloy requested that all agency heads trim their budgets by an additional 10% should the ongoing talks with the unions fail.^[32]

On Feb. 16, 2011, Gov. Malloy presented his proposed two-year, $40 billion budget proposal. His $19.7 billion budget plan for FY2012 was one part of the plan. It is approximately the same amount as the prior year's budget and in it he asked public employees and taxpayers to share in the pain of closing a $3.2 billion deficit.^[33] The FY2012 budget includes an array of tax increases as well as concessions from state employees. Malloy proposed a combined solution of $1.5 billion in tax increases and $1.8 billion in spending cuts, including $1 billion in labor savings. ^[34] For just FY2012, the governor aims for $800 million in spending cuts, $1.5 billion in tax hikes and $1 billion in union concessions.^[31]

Malloy's proposed tax increase include boosting the sales tax rate to 6.3 percent. His proposal would raise taxes by $1.5 billion in FY2012.^[35]

Malloy is proposing the streamlining of state government by reducing the number of government agencies from 81 to 57. He also cut his own administrative staff by 15 percent.

Malloy pledged $15 million to market and promote the state's multibillion-dollar tourism industry. That is an increase from $1 million in previous budgets.

Highlights of Malloy's proposed budget include: ^[36]

• Creates eight tax brackets for personal income tax.
• Funds smoking cessation programs for Medicaid recipients.
• Reduces dental benefits for Medicaid recipients
• Strengthen Medicaid fraud recovery efforts
• Increase Medicaid reimbursement rate to nursing homes
• Proposes development of 150 new units of supportive housing to help families at risk of homelessness
• Funds school reforms, requires teacher evaluations to be partly based on student achievement by 2013
• $2 million in each yer of the biennium for child daycare and school readiness programs
• 17-year-olds will be considered juveniles as of July 1, 2012
• $14 million for pay-as-you-go transportation projects

In FY2013, however, Malloy will have to close a $3 billion deficit, when he is only proposing to increase state spending by $500 million to $18.4 billion.^[33]

The governor said he planned to maintain $2.8 billion in state aid to municipalities, depending on concessions made by labor during talks with the administration. About two-thirds of state aid to municipalities comes through the Education Cost Sharing program, which the governor promised to fund at the same level as this year.^[37]

State Employees

The governor's proposed budget relies on acceptance by state workers of $2 billion in cost savings over two years, which will come as a result of freezing wages and longevity payments, raising the retirement age and medical co-pays, and switching their health plan.^[33]

Education

Gov. Malloy's proposed budget does not reduce state aid to education for FY2012.^[33]

School districts rely on state grants for about 40 percent of their funding. Before the governor released his budget, Connecticut educators have expressed concerned about school funding in the FY2012 state budget. ^[38] One of the things we are very concerned about is what is going to happen when the federal stimulus aid goes away," said Bob Rader, executive director of the Connecticut Association of Boards of Education.^[38] Without another stimulus or a strong economic turnaround, "The state of Connecticut will be facing a $269.5 million gap just to level-fund the ECS grants," said Tom Murphy, state Department of Education spokesman.^[38]

Higher Education

A report by the Office of Legislative Research found that the growth in higher education budgets has far outstripped the level of state General Fund support for the institutions.^[39] While combined spending by the state's three higher education systems grew by nearly 230% over two decades, to $1.94 billion in FY2009, the General Fund contribution increased by less than 83%, to $556 million.^[39][9] "Public universities are definitely on the firing line," said Higher Education Commissioner Michael Meotti. "The next several years are going to be the toughest budget years higher education has faced in the last 50 or 60 years."^[9]

[edit] Budget transparency

See also: Evaluation of Connecticut state website or Constitutional provisions regarding reading of bills

Connecticut does not have a constitutional provision providing time for review of bills prior to passage by the legislature.

The state's official spending database online is found here. The site was created by Public Act No. 10-155 and is operated by the Office of Fiscal Analysis using data provided by the Office of the State Comptroller.

[edit] 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
transparency.CT.gov	P	Y	Y	Y	N	Y

• Expenditures are navigable through several categories, but not through a traditional search bar.^[40]
• Grants are viewable as an expenditure type.^[41]
• Contracts are posted.^[42]
• Line item expenditures are available.
• Department budgets are not available.
• Public employee salaries and benefit details are available.^[43]

[edit] Independent transparency sites

None.

[edit] State Budget for FY2011

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

Connecticut ended FY2011 with a $237 million surplus according to unaudited figures released in Sept. 2011. State Comptroller Kevin Lembo said that the state avoided a $1 billion deficit by using "temporary financial fixes."^[44] $14.5 million of the surplus will go toward future retiree health care — a payment he said the state is contractually obligated to make — and to start paying $916 million in "economic recovery notes" the state issued in 2009.^[44]

State employees were paid a whopping $250 million in overtime in FY2011, and state officials said an estimated 2,000 state workers — out of a workforce of more than 45,000 — made overtime amounting to at least half their regular pay during a one-month period.^[45]

Comptroller Lembo announced in early May 2011 that the state's revenues increased by $414.9 million for the month of April, higher than what he anticipated. He projected a state budget surplus of $509.6 million for FY2011 fiscal year which ends on June 30, 2011,and recommended that the surplus be used to payi off the state’s debt and to replenish the Rainy Day Fund.^[24]

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $86 million, which represents 0.5% of the FY2011 state budget.^[46]

State Treasurer Denise L. Nappier said in Dec. 2010 that revenues from unclaimed properties should reach $92 million in FY2011, $42 million above the level originally projected in the $19.01 billion state budget.^[47]

Seven weeks into FY2011 Gov. Rell predicted that the state would face a budget shortfall of $63.4 million.^[48] The state has an approximately $18 million deficit in the state budget, in part due to an increased number of people cashing in on unclaimed property.^[49]

FY2011 is the second year of the state's biennial budget, with the budget for FY2011 amounting to $19.01 billion.^[48] The two-year, $37.6 billion state budget, of which FY2011 is 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.^[50]

Gov. Rell signed the $19 billion FY2011 budget, Senate Bill 494, on May 7, 2010, two days after the legislature adjourned.^[50] The budget cuts spending by state agencies by $163.4 million and lowers interest expenses by more than 50 percent: $133.5 million over eight years versus $300.6 million over 10 years.^[50] Under the budget agreement, a plan to borrow $989 million through Economic Recovery Revenue Bonds replaces the $1.3 billion in “securitization” called for in last year's budget, which became law without Governor Rell’s signature. These bonds have shorter terms (eight years versus 10 years) and lower interest rates (3 percent versus 4 percent), resulting in a net savings.^[50] Such borrowing balances the budget, and leaves a projected $3.4 billion deficit for 2011-12.^[51] The plan uses 34% of an existing charge that appears on monthly electric bills that was set to expire to repay the bonds. Instead of being the charge disappearing from customer's bills, the average household's charge will drop from $7.50 to $2.50 per month.^[50]

The current debt per capita is $4,859, the highest in the nation.^[52]

[edit] Budget Background

The Connecticut Legislature in 2009 passed some cost savings measures that included:^[53]

• Reduction in personnel costs by $701.9 million over 3 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 14th in odd-numbered years. During even number years the Governor submits a report to the legislature on the status of the enacted budget along with any recommendations for revisions and adjustments.^[54]

[edit] Accounting Principles

Main article: 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.^[55]

The Connecticut Auditors of Public Accounts is under the direction of 2 state auditors appointed by the State Legislature; having 2 auditors is unique among the states. Their audit reports are published online.^[56]

[edit] Stimulus

Connecticut has received $1.4 billion in federal funding.^[58]

[edit] Public Employees

Main article: Connecticut public employee salaries

Main article: Connecticut public pensions

According to 2008 Census data, the state of Connecticut and local governments in the state employed a total of 227,433 people.^[59] Of those employees, 166,065 were full-time employees receiving a net pay of $788,852,326 per month and 58,965 were part-time employees paid $76,572,375 per month.^[59] Approximately 62% of those employees, or 140,131 employees, were in education or higher education.^[59]

5,000 state employees and 6,000 public workers in dozens of local municipalities, school districts, and regional education centers.^[60]

[edit] See Also

• Connecticut taxpayer-funded lobbying
• Connecticut public pensions

[edit] External links

• State Budget Solutions, Connecticut
• Model transparency legislation from the American Legislative Exchange Council is available at this link.
• Yankee Institute for Public Policy
• Connecticut Office of Policy and Management
• Connecticut General Assembly
• Connecticut state site
• Connecticut Government spending

[edit] Additional Reading

• Gov. Jodi Rell's budget address for FY 2010-11
• MSNBC,"Find out who make the state's biggest buck," February 26,2009

[edit] References

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