Connecticut’s state budget crisis is a very serious situation, but one that employers across the state view as neither surprising nor unsolvable. The business community has watched the legislature’s growing appetite for spending and general reluctance to evaluate the outcomes of that spending or improve state government operations — flaws now painfully exposed by the recession.
Businesses know that Connecticut’s fiscal health and the health of our economy are linked. A strong economy produces the jobs and prosperity our families need, as well as the tax revenues state government needs for vital programs and services. When state spending is left unchecked, it threatens both Connecticut’s economy and the ability of government to function well.
The budget passed by the Democratic legislative majority and that went into law without the governor’s signature dealt with record budget deficits not by real spending cuts, but by borrowing more, depleting one-time-only revenue sources (Rainy Day Fund and federal stimulus dollars) and increasing taxes. Any significant changes to the structure of state government that would make it operate better and more cost-effectively were also avoided.
The fact that the new state budget is already out of balance shows that this path doesn’t work. Lawmakers missed several warning signs that should have convinced them to practice greater fiscal control, including:
• The state budget has grown by nearly 50 percent in 10 years, while Connecticut’s population has increased by less than 3 percent.
• Job losses are now more than 80,000 and economists say they will continue to climb through the second quarter of 2010.
• High quality, high paying jobs have been lost in manufacturing, finance, business services and construction, greatly affecting our tax base.
It’s time for lawmakers to reach the conclusion that most of us have already arrived at: Just as businesses and individuals have had to cut their budgets, so must state government learn to do more with less.
We need a new model for state government that will reduce costs, improve the delivery of essential state services and safeguard the state’s long-term fiscal health. We’ve already seen some positive steps: the legislature’s Appropriations Committee started a results-based accountability initiative that sets outcome goals across departmental lines, and requires agencies to detail performance information with budget requests. And the new Commission on Enhancing Agency Outcomes is finding dozens of ways to save the state money.
But these are small steps when what’s really needed is a major overhaul of state government.
Connecticut businesses have extensive experience in adapting to new and tighter fiscal conditions. Many have embraced new processes and technologies to improve their operations. Because of that, businesses have offered several recommendations to help get Connecticut off the budget-deficit treadmill:
• Reduce state spending while improving state government:
– Examine every aspect of government to root out wasteful spending and streamline programs and services.
– Use proven LEAN processes to improve the delivery of services, reduce their costs and better allocate resources.
– Make prudent investments in technology to modernize state government and make it more accessible to state residents.
– During future contract negotiations, bring state employee wages and benefits in line with those in the private sector.
• Make better use of taxpayers’ dollars with alternatives to deliver services cheaper.
– Use more nonprofit agencies to provide high-quality community services at a lower cost than the state.
– Take advantage of innovative methods that will cut the rate of prison recidivism.
• Make state tax policy predictable, consistent and fair.
– Promote tax policy that spur businesses to invest more in technology and productivity and create more jobs.
– Develop a plan to address our long-term state and municipal unfunded liabilities.
– Tap an outside commission to review government operations and make recommendations on how to improve them.
Change is not easy, but the process must begin now in state government. It’s hard to imagine any other $18 billion organization or business that could survive without seeing the need to modernize and improve its operations on a regular basis.
Bringing long-needed improvements to state government and no longer ignoring the new economic realities in Connecticut will help lawmakers craft realistic, viable state budgets. And that will help ensure the long-term health of our economy.
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Joseph F. Brennan is senior vice president of public policy for CBIA.
