There aren’t a lot of issues on which Connecticut legislators are in bipartisan agreement. It’s a shame that one of them is deciding to kick the state’s budget crisis down the road. Yet that’s just what the state’s elected officials have done.
Sure, they rearranged some deck chairs. Sportsmen got a break on fees; bad drivers will make up the slack. Some troopers lost some meal money but nobody got slammed with a tax increase. The legislators can now go home and tell their constituents in this election year that they did no harm in closing this year’s budget deficit.
But they did do damage. Time is money and by not facing the hard choices now, they are leaving the next session with an even worse headache as the state keeps spending itself further into the hole.
When this legislative session ends May 5, Connecticut will still be staring at a massive budget deficit estimated at $700 million in the next budget cycle — which begins inn just a matter of weeks — and as much as $3 billion in 2012. Those are sobering numbers that involve more than fine tuning the fishing license fee.
The rainy day fund is gone. There are no massive layoffs, no serious cutbacks in state programs. Nobody dares to talk about the unfunded pension liabilities that got worse when the Legislature decided to resolve the immediate crisis by deferring payments into that fund. That accounting sleight of hand masks a problem that reaches tens of billiojns of dollars; it doesn’t solve it.
Pensions aren’t the only ticking time bomb. As Greg Bordonaro’s front page story details, there is another $1 billion problem looming in the tax credits that are owed companies yet can’t be accessed. But unlike the pension morass, the tax credit dilemma is one that can be turned into a positive. Of course, that’ll take a change on the order of repealing gravity. It can only happen if legislators open their minds to creative, business-friendly solutions.
We’re not prepared to endorse developer Dan Matos’ plan today. The devil is always in the details and those require further exploration. We will say it’s a plan worth a hard look.
In a recent presentation to a room full of investors at The Hartford Club, economist Jason Giulietti painted a particularly grim picture of the state’s economic future. He does work for the Connecticut Business & Industry Association and the New England Economic Partnership so he’s on top of the numbers. And they’re not pretty. He foresees continued deterioration of the real estate market, painfully slow job recovery and generally slow growth for years to come. He ticked off the data on how the state compares to others in areas like debt per capita and overall fiscal condition. Not surprisingly, we’re among the five worst in virtually every category. The best news he could give his audience was that recent surveys are indicating that the business community senses the worst has past.
Both he and the night’s featured speaker, investment guru turned TV pundit Joe Battipaglia, were pessimistic about the chances of elected officials getting it right at either the state or national level.
When asked whether he saw a spate of municipal and perhaps even state bankruptcies ahead, Giulietti said he didn’t expect the situation to reach that level but acknowledged options like bankruptcy will have to be on the table for discussion as it has been in California.
Perhaps that is the true silver lining here. California’s Orange County, a place with a population only slightly smaller than Connecticut, took the bankruptcy route 16 years ago and came back strong. It proved that in certain limited cases, that’s a viable strategy.
Maybe when historians look back at this period, they’ll celebrate the state Legislature as a trendsetter in the art of creative destruction. If we continue to mask problems, perhaps we can be the first to bankruptcy court where judges with job security can make the decisions elected officials won’t. Then we can get serious about rebuilding Connecticut into the economic powerhouse it has been and can be again.
