Gov. Ned Lamont has announced some of the legislative proposals he will include in his first state budget, as well as a proposal to shrink the state’s borrowing by 39 percent, the equivalent of hundreds of millions of dollars annually.
Referring to it as a self-imposed “Debt Diet,” the governor said the latter proposal would reduce long-term debt service payments and potentially save the state as much as $2 billion over the next decade.
Between 2012 and 2019, the state averaged approximately $1.59 billion worth of bond authorizations per year. Lamont’s proposed budget would significantly scale that back, bringing annual bond authorizations to $960 million – a reduction of nearly $600 million, or 39 percent.
“We cannot put Connecticut’s future on the credit card,” said Lamont, who will present his budget proposal to the General Assembly on Feb. 20. “The state has had a problem putting costs on Connecticut’s credit card that it simply can’t afford to pay. As we get ready to release a budget that will reshape and stabilize Connecticut’s financial future, it is essential we look at our state’s borrowing and how the size of those future debt service costs will pile onto existing obligations – impacting our future and our children’s. To trim costs down the road, we have to reduce our bloated capital spending starting right now.”
In order to live within the “Debt Diet,” the governor and the Office of Policy and Management would have to adjust and reprioritize the capital budget, which typically includes large-scale projects such as school construction and other major infrastructure upgrades. That would not affect any projects currently under construction. Lamont said he will continue to make key investments in transportation infrastructure by matching the authorization levels over the last eight years.
The governor said he would also request new authorizations for municipal projects to serve as catalysts for growth and a stronger investment in information technology.
The governor, who serves as chairman of the state Bond Commission, has also canceled the January and February scheduled meetings of the group, saying that the state should limit its bonding agenda to critical needs only and at levels that are within the state’s financial ability to pay.
Lamont has also issued a number of other proposals that he said are aimed at making state government smarter, more responsive to the needs of residents and more engaged with the private sector.
“State government should be reflective of the needs of its residents and it’s my intention to do so while bringing Connecticut state government into the 21st century,” Lamont said. “These proposals are reflective of concerns raised by residents to help simplify their lives and cut down on the hassle of accessing certain services, and I’m pleased to be able to help address them.
“In addition,” he continued, “I’m proud to introduce a bill that will make it easier for state agencies to form a public-private partnership with private entities in support of economic development and job creation.”
The proposals include:
- Simplifying residents’ experience with the Department of Motor Vehicles by extending the time between driver’s license renewals from six years to eight years, and the time between registrations from two years to three years. In addition, Lamont said he would work to implement for residents a “skip a trip” option between renewals by renewing their license online.
- Streamlining partnerships between state agencies and the private sector by expanding the number of agencies able to participate in public-private partnerships – and cut down on red tape around those partnerships – in support of economic development and job creation. For example, a public-private partnership between the Department of Transportation and private industry could help spur transit-oriented development along CTfastrak and the Hartford Line; help develop new rail stations in Orange and on the Hartford Line; and expand parking capacity and support bridge upgrades and replacements, among other projects.
- Making it easier to participate in the electoral process by establishing high school and college credit for volunteering during and before local elections to help increase the number of available election workers; making Election Day a holiday in a cost-neutral way by swapping it with another current state holiday; increasing the use of technology to make voter registration faster and easier; decreasing wait time on Election Day by increasing the number of available same-day registration locations; and enabling the electronic delivery of writs of special election.
Lamont said he had worked closely with Secretary of State Denise Merrill to develop the electoral process proposals.
Separately, Lamont issued an open letter to Connecticut residents promising to govern “transparently, openly, and in a way that encourages debate, dialogue and discussion on all sides of an issue.”
The governor noted that “We are expected to end the fiscal year with a surplus. While that sounds like great news, I ask you to temper your enthusiasm for a few reasons.
- First, our economy has still not fully recovered from the Great Recession more than a decade ago and we must be prepared for the possibility of another economic downturn.
- Second, we cannot allow the fact that we are expecting a surplus and the likelihood of a significant deposit to the Rainy Day Fund lull us into a false sense of security and sap the urgency we need to confront our fiscal crisis head-on. In fact, a significant portion of the anticipated surplus must, as required by the recently enacted volatility cap, be deposited to the Rainy Day Fund and therefore cannot be used to address the budget gap. Although we could use that surplus to balance next year’s budget, our fixed costs – the true culprits behind our continued deficits – are growing by hundreds of millions of dollars per year. That growth eats into our ability to make much-needed investments in our future – things like a 21st century transportation system, education and workforce and economic development.
“These fixed costs are not something that we can simply cut, as they are contractual obligations, similar to your mortgage or credit card debt,” Lamont said.
“In my proposed budget, I’ll suggest a path forward to finally address those fixed costs and reduce the rate of increase. I’ll also hold the line on the operating budget, while increasing investments in technology which, over time, will streamline our citizens’ interface with state government and produce real long-term savings.
“These savings won’t happen overnight, but we can’t continue to put off to tomorrow what we should have begun a decade ago,” he said. “People expect an Amazon Prime experience and our state government’s capabilities, namely its technology, simply aren’t there.
”In terms of revenue,” Lamont said, “the sales tax used to be the revenue workhorse, supporting most of our state’s budget. But today, the sales tax is not applied to the fastest growing sectors of our economy including the digital and service economy. If you go to a store to buy a DVD, you pay sales tax. But if you download that same DVD from a streaming service, you don’t. What sense does that make?
“There are many similar examples in our state’s current sales tax exemptions list and we need to streamline our system and ensure fundamental fairness,” he said. “Next week, I plan to start a discussion with the legislature about how we can reform the sales tax without raising rates.”
Lamont promised “a realistic and thoughtful budget that will jumpstart the Connecticut economy, and work for everyone – leaving no one behind.” He said he would work with state legislators, union and business leaders, and other stakeholders to “push toward an honestly balanced budget – which we will pass in the light of day and before the end of the legislative session in June.”
The governor further said that he, Lt. Gov. Susan Bysiewicz and key commissioners will travel around the state to discuss the budget and its goals with residents over the coming weeks and months.