As a regional business audience and Gov. Dannel P. Malloy listened, Webster Bank CEO Jim Smith last week called on lawmakers to comply with a 1992 voter edict to implement a constitutional spending cap.
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As a regional business audience and Gov. Dannel P. Malloy listened, Webster Bank CEO Jim Smith last week called on lawmakers to comply with a 1992 voter edict to implement a constitutional spending cap.
Smith said businesses will be watching the upcoming legislative session closely for action on the cap, which aims to limit budget expenditures by tying the spending growth rate to inflation and personal income. The cap, however, was deemed unenforceable by the state Attorney General two years ago.
Enforcing the cap would “send a very strong message about [lawmakers'] commitment to fiscal responsibility,” Smith said at the MetroHartford Alliance breakfast held in downtown Hartford.
“No discipline means no confidence, and it affects investment choices and economic growth and job growth and revenue growth, … which the state desperately needs,” he added.
In calling for stricter definitions of what is and isn't exempt from the spending cap, Smith was echoing a position long held by many business leaders.
In a novel and controversial move two years ago, lawmakers approved exempting $1.8 billion in unfunded pension liabilities from the cap calculation in fiscal 2016.
Lawmakers would need to pass another law in the upcoming session if they wanted to allow a similar exemption in fiscal 2018 or beyond.
But there's a deep political divide over how to proceed.
A legislature-created Spending Cap Commission wrapped a year of work last week without reaching consensus on any official recommendations to lawmakers.
The legislature would need a three-fifths supermajority to change key definitions related to the spending cap. And with an evenly divided Senate, and Democrats holding the House by just a handful of seats, that could prove difficult.
After the Spending Cap Commission failed to reach an accord last week, Co-Chair Patricia Widlitz, a former Democratic state representative, said: “Good luck to the legislators giving it a second try.”
– Matt Pilon