Now that Labor Day, the unofficial start of election season, is around the corner, it appears that a major campaign issue will be the state’s fiscal health, and that’s a good thing.
The governor and the next General Assembly will have to tackle a daunting budget challenge starting in January — some analysts project a deficit in excess of a billion dollars in the next fiscal year. That is discouraging for state taxpayers and a significant factor in Connecticut’s low national economic competitiveness rankings.
Connecticut’s fiscal problems did not develop overnight. State spending has more than tripled over the last 25 years, during which time we’ve only seen modest growth in jobs and population in the state.
During the same period, Connecticut’s long-term debt has skyrocketed. Estimated to be the third-highest per capita in the country, that debt includes unfunded liabilities for state employee pensions and post-retirement benefits, bonded indebtedness, and federal Unemployment Trust Fund loans.
This fiscal instability has a chilling effect on economic growth and job creation. Employers, regardless of size, are hesitant to make investments in locations perceived to be fiscally unpredictable. Businesses require consistency and predictability in the tax system to make long-range decisions about where and when to expand or locate. Unfortunately Connecticut has developed a reputation for fiscal instability over time, and we must reverse that reputation if we want to see our economy reach its full potential.
The solution, however, is not as simple as cutting waste from state government; we need to make government work better at lower cost.
To be sure, some progress has been made to lean the cost of state government. Last October, for example, the governor released a report on how state agencies are streamlining their operations and making more efficient use of taxpayer dollars.
Accomplishments include a savings of $1.84 million per year at DEEP through reduced state energy bills, a savings of $18 million at the Department of Administrative Services through renegotiated contracts for goods and services, and the recovery of hundreds-of-thousands-of-dollars in unemployment insurance overpayments through an anti-fraud partnership between the Department of Labor and the Office of the Chief State’s Attorney.
The state has also reduced its long-term debt by 15 percent over the last three years, according to the governor’s budget office.
Of course, much more needs to be done — including improving the state’s IT systems to allow government agencies to run more efficiently — but the state’s fiscal problems have built up over many years, and many years will be needed to solve them. The process, however, must accelerate.
That’s why it’s important to ask candidates this fall how they will deal with the state’s fiscal situation. Will they commit to improving how Connecticut delivers critical services and approaches significant parts of the budget, including transportation, social services, long-term health care, corrections, and state employee pensions and post-retirement benefits?
These are all issues that voters and candidates must talk about this fall. And they’re key parts of the new CT20x17 campaign that’s aiming to improve Connecticut’s economy and put the Nutmeg State where it should be — among the top 20 most economically competitive states in the country by 2017.
Pete Gioia is an economist and vice president at the Connecticut Business & Industry Association.
