The legislative session ended at midnight on Wednesday, May 9th. This session was intended for budget adjustments to the full, two-year budget adopted last October and to consider additional legislation, which as always, there was a lot of.
Connecticut’s budget, which had been drifting into deficit, was reprieved by an, apparently, unanticipated revenue boost from the repatriation of offshore profits by financial firms. This windfall, in excess of $1 billion, will be used to cover shortfalls and to bolster programs.
The Republican budget adjustment plan proposed that one third of that excess surplus be put in the underfunded state employees’ pension fund, one third into the teachers’ pension fund, and one third into the rainy day fund. This would have increased the funding ratio of these two pension funds and was favored by the unions, who prefer cash from the state over I O U’s. Legislative Democrats preferred that all additional surplus go into the rainy day fund… and this is what happened in the compromise budget plan we adopted.
While putting money into the rainy day fund is not a bad thing, it’s like placing the cookie jar on a higher shelf—it’s harder to get to, but not impossible. For instance, a future legislature could intentionally spend its way into a deficit, which the comptroller would be forced to close by drawing on the rainy day fund.
I supported the eventual compromise budget adjustment plan because of its key components: no tax increases, full restoration of the Medicare Savings Plan, and increased funding to the Special Transportation Fund from the transfer of sales tax on cars. It also preserves crucial municipal funding for our towns, like ECS and Town Aid Road grants, which the governor would have cut if this budget had not passed.
While we can all be happy that the state had a revenue windfall, the state’s underlying economic issues remain substantially unchanged. Connecticut’s economy shrank in 2017, and has now shrank in three of the past four years – all while the country as a whole is enjoying strong economic growth. We still need pro-growth reforms such as lower taxes, lower regulation, and state employee benefits that match the private sector. Republicans proposed reforms such as removing overtime from pension calculations after 2027, but these reforms were blocked.
In future legislative sessions, I intend to advocate for the long-term structural changes our state will need in order to end its persistent fiscal crisis.
As always, please email me at email@example.com if you have any questions about the state budget or any other piece of legislation from this session. For information on other bills that were discussed this year, you can visit www.cga.ct.gov.