Connecticut state budget (2008-2009)
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In early February 2009 Gov. M. Jodi Rell announced that the state of Connecticut is facing a deficit of $1.35 billion for the current fiscal year. This deficit, she said, is going to cause "painful" budget cuts but added that she will not propose raising taxes during a recession. According to the fiscal office, the state is expected to be $3.97 billion in deficit in the fiscal year that begins July 1 and $4.71 billion the following year.[1] Connecticut Senate president pro tempore Donald Williams said that whether it is budget cuts or raising taxes, "Neither solution is beneficial to the Connecticut economy. Either side of the equation is harmful."[1]
[edit] Impact of budget woes
- Main article: 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.[2] An average of 8,100 new claims have been filed per week but in the week ending January 10, 2009 the average jumped to 13,000. [3]
- On February 26 the Senate and House unanimously approved a $1.2 billion deficit cutting package. The bill has yet to be signed by the Governor however, the bill calls for cuts across the board and no tax increases.[4]
- According to the FY 2010-11 budget bill meal allowances for non-union state police officers would be cut, request for $50 million in contract cancellations from the executive branch, expand the state's nickel deposit program to water bottles and calls for the creation of a new commission to consider potential mergers of certain state agencies for long-term savings.[4]
- According to the deficit-cutting budget bill commissions paid to state lottery agents will be reduced from 5 percent to 4 percent of an agent's lottery sales. [5]
[edit] Budget background
Prior to the 1971-72 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 1st of an odd year and ends June 30th of the next odd year. For example, July 1, 2009 to June 30, 2011.[6]
Once the state's agencies submit their budget requests for the upcoming biennium the Governor or Governor-elect review, revise 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.[6]
[edit] 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 [7] | $160.4 [7] |
| 2001 | $25.8 [7] | $165.0 [7] |
| 2002 | $27.6 [7] | $166.1 [7] |
| 2003 | $28.2 [7] | $169.9 [7] |
| 2004 | $28.8 [7] | $182.1 [7] |
| 2005 | $29.6 [7] | $193.3 [7] |
| 2006 | $31.5 [7] | $205.0 [7] |
| 2007 | $33.4 [7] | $216.3 [7] |
| 2008 | $35.4 [7] | $228.2 [7] |
| 2009 | $37.6* [7] | $240.8* [7] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
Gov. M. Jodi Rell 2009 State of the State address |
- Revenue from the state income tax is estimated at $1 billion lower than estimated, the sales tax is down by $386 million and real estate conveyance taxes are $109 million than expected. Home sales and prices have dropped causing a decrease in expected revenue.[1][8]
- Approximately 1,057 single-family homes were on sale in January, 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 are the lowest number of sales for single-family homes in 21 years for the month of January. [9]
- While some legislators are calling for furloughs or layoffs some Connecticut residents question the salaries of some of Connecticut's public employees including University of Connecticut basketball coach Jim Calhoun who has a salary of $1,618,655.44. University of Connecticut coach's Calhoun, football coach Randy Edsall who's salary is $1,380,569 and women’s basketball coach Geno Auriemma who's salary is $1,309,426.44 are three of the highest paid public employees of the state of Connecticut.[10] [11]
[edit] Proposed actions
[edit] Governor M. Jodi Rell
Despite the state legislature unanimously passing a deficit-cutting budget bill in February, Gov. Rell said that she is not certain whether or not she will sign it. On February 19, Gov. Rell proposed her own deficit-cutting bill, which she said will put money back in resident's pockets.[12] Rell said that an important step that needs to be taken is the restructuring of government in order to balance the budget and minimizing excessive spending. Rell also suggests the use of the Rainy Day fund, which has 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.”[12] [13]
[edit] Republicans
Like Gov. Rell, Republicans support budget cuts and do not support the increase of taxes. In early February, House and Senate Republicans unveiled their own budget proposal. "There is 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.[14] The Republicans' proposal suggests 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.[14]
[edit] Democrats
Democrats across the state said that they are wary of Gov. Rell's budget deficit projections and estimate that larger cuts are needed in order to balance the budget and that the deficit is greater than estimated. “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 are necessary, especially if taxes aren't going to be increased. [15] In mid-February Democrats said that they $200 million that could be cut from the state's off-budget funds and accounts. Approximately $1.6 billion are estimated in the off-budget funds. However, Robert Genuario, the governor's budget director, said the funds are not pools of hidden cash. Some are large bond funds that finance public school construction and purchases of open space and can't be used for other purposes.[16]
[edit] Use taxes to raise revenue
In light of the state's budget deficit a coalition of community groups formed 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 is the way to solve the state's budget crisis and that she will not consider raising taxes, Jeffrey Tebbs, a Yale law student, said,"Slashing services across the board is unconscionable.”[17] 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 states 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. [17] [18] The proposed budget includes the use of the Rainy Day fund and the federal Economic Stimulus Package however the grand total for the proposed budget amounts to $2.9 billion, 60 percent of which are increases in revenue. [19]
[edit] Economic Stimulus Package
Connecticut is expected to receive approximately $3 billion from the $787 billion economic stimulus package.[20] According to White House officials the stimulus bill is estimated to create or save 41,000 jobs.[21]
According to preliminary reports Connecticut is expected to receive:[20][22][23]
- $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
[edit] Budget transparency
Connecticut currently has no statewide, official spending database online.
[edit] 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 is estimated that 69%, or over $541 billion, will be administered by state governments.[24]
- It is estimated that Connecticut will receive at least $1.8 billion in federal funding.[25]
- The economic recovery website for Connecticut is available here.
[edit] Legislation
- Main article: Connecticut transparency legislation
- House Bill 5954 [26] would establish a government transparency website to enable the public to track state spending and to promote transparency.
- House Bill 5959 [27] would require the Office of Policy and Management and the Office of Fiscal Analysis each post the state budget on their respective web sites.
- House Bill 5962 [28] would establish a searchable online database of state expenditures.
- Senate Bill 340 [29] seeks to enable easier public examination of all state contracts.
- Senate Bill 521 [30] would require full disclosure and transparency in state contracting.
- Senate Bill 523 [31] would establish a state website tracking the award of state grants and contracts.
These bills have 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, has been referred to the Appropriations Committee.
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| 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 |
[edit] Limitations and Suggestions
[edit] 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.[32]
[edit] Independent transparency sites
None.
[edit] Public employee salary information
None.
[edit] See Also
Connecticut taxpayer-funded lobbying
[edit] External links
- 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
- ↑ 1.0 1.1 1.2 The Hartford Courant,"Rell warns of cuts as budget deficit grows," February 3,2009
- ↑ Connecticut Department of Labor,"Unemployment rate," retrieved February 26,2009
- ↑ Norwich Bulletin,"Jobless claims overwhelm staff," February 15,2009
- ↑ 4.0 4.1 The Day,"Deficit-cutting bill approved by General Assembly," February 26,2009
- ↑ Associated Press,"Lawmakers pass third deficit-cutting plan," February 26,2009
- ↑ 6.0 6.1 Connecticut Office of Fiscal Analysis,"State budget process," retrieved February 26,2009
- ↑ 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 US Government Spending,"Connecticut State and Local spending," retrieved February 26,2009
- ↑ Reuters,"Connecticut gov. revises deficit f'cast to $944 mln," February 20,2009
- ↑ Hartford Business,"CT home sales sink in January," retrieved February 26,2009
- ↑ MSNBC,"Find out who make the state's biggest buck," February 26,2009
- ↑ WTVD,"No salary cuts for top employees," February 26,2009
- ↑ 12.0 12.1 Yale Daily news,"Rell discuses budget," February 25,2009
- ↑ Connecticut Office of Policy and Management,"Governor's Budget FY 2010-11," February 4,2009
- ↑ 14.0 14.1 WFSB,"Republicans' proposal includes furloughs," February 11,2009
- ↑ Journal Inquirer,"Dems offer to show balanced budget without tax hikes," February 20,2009
- ↑ Associated Press,"Conn. Democrats propose tapping little-known funds," February 24,2009
- ↑ 17.0 17.1 Yale Daily News,"Elis propose alternative Connecticut budget," February 4,2009
- ↑ Better Choices for Connecticut,"State budget proposal," February 2,2009
- ↑ CT News Junkie,"Coalition To Rell: don’t cut spending, raise revenue," February 3,2009
- ↑ 20.0 20.1 The Bridgeport News,"City seeks its share of federal stimulus," February 24,2009
- ↑ The Advocate,"Connecticut needs the American Recovery and Reinvestment Act," February 25,2009
- ↑ The New London Times,"At the Capitol - awaiting the stimulus details," February 26,2009
- ↑ Norwalk Plus,"Funding for Connecticut announced in economic recovery plan," February 13,2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal, "Stimulus Spending by State"
- ↑ Text & Status of HB5954
- ↑ Text & Status of HB5959
- ↑ Text & Status of HB5962
- ↑ Text & Status of SB340
- ↑ Text & Status of SB521
- ↑ Text & Status of SB523
- ↑ National Taxpayers Union, "Taxpayers Support Creating Spending Database in Connecticut," April 11, 2007
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