August 2, 2011

WHEN IS A SURPLUS REALLY NOT A SURPLUS, WHEN IT’S YOUR MONEY

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As it turns out, when Governor Malloy and Democrats in the legislature passed the state budget I voted against, it increased taxes by approximately $3.6 billion over the next two years.

As a result of the historically large tax increase, Democrats built in a large surplus to put in the state’s Rainy Day Fund – to the tune of approximately $1 billion over the next two years. In essence, Connecticut citizens were being dramatically overtaxed to fund this account.

The Rainy Day Fund is a hedge against bad economic times and was used to plug past budget deficits in 2009 and 2010. Our new Governor pledged not to continue this practice when he took office in January. He went to 17 town hall meeting across the state saying, “No more gimmicks or one-shot revenues to balance the state budget.”

The Rainy Day Fund can hold up to five percent of net appropriations to cover unanticipated deficits. Any end of year surplus goes to replenish the Rainy Day Fund first.

When the Governor and union leadership had originally agreed upon a state employee concession package, the total amount of the package was $1.6 billion in savings, instead of $2 billion that was in the initial budget passed by Democrats. So, the budget was out of balance before the new fiscal year even started by $400 million.

In the last days of session, Governor Malloy and the Democrats passed a budget-fix bill. To fix the new gap in the budget, they relied almost exclusively on surplus dollars. The two-year surplus went from $1 billion to approximately $570 million, which is where it stands now. This is still a very large amount of surplus to build into a budget, and it still represents the over-taxation of citizens.

In recent statements, the Governor has promised NOT to use any more of the surplus to make up for the $1.6 billion in union concessions which (barring a re-vote or other unexpected action) will not happen.

But what happens if the $1.6 billion in anticipated savings is never realized, what happens then? Since Governor Malloy has already retreated from his original position chances are he will not hesitate to once again dip into the over-taxed fund AKA the Rainy Day Fund.

Please feel free to contact my office at 1-800-842-1324 to voice your comments or concerns on this issue or other issues of the day. If you would like to receive regular updates from my office please go to www.cthousegop.com and sign up to get my e-newsletter and latest videos.