In his recent State of the State address Gov. Dannel P. Malloy stated, “We wrongly assume government can do everything it does now. It just isn”™t sustainable.”
The Connecticut Business and Industry Association agrees.
In a recent statement the CBIA, the state”™s largest business organization, said it believes the tough recommendations outlined by the governor”™s budget proposal are necessary if the state is to resolve its fiscal issues and build a strong, competitive economy.
“We no longer have a choice,” said CBIA president and CEO Joe Brennan. “This is what the state”™s fiscal condition demands. The Governor”™s responding to what he”™s hearing from residents and large and small businesses, that government must change the way it operates if Connecticut”™s going to see strong, vibrant economic growth.”
According to the CBIA, Connecticut faces a budget deficit of at least $7 million for this fiscal year and approximately $550 million in the next, plus billion-dollar deficits in funding for state employee retirement benefits.
Malloy”™s $19.87 billion budget revision would cut 5.75 percent from all agency discretionary budgets and overall reduce state spending by $570 million in the next fiscal year, a budget cut of 2.8 percent from what had been approved.
He said the state”™s workforce would have to be reduced by more than 1,000 through attrition “and other means.”
Malloy has outlined a five-point strategy for chaining the way the state budgets in what the CBIA refers to as a major overhaul of how the state works and budgets and said are reflective of sentiments expressed by the state business community.
Malloy”™s five point strategy includes:
- limiting spending to available resources by abandoning the “current services” system of budgeting which automatically funds every activity or line item previously funded, with inflation increases, every year;
- reforming the funding of long-term state employee pensions and other retirement costs;
- defining state government”™s “core services” to prioritize state spending;
- holding state agencies accountable for results, by focusing on outcomes and cost-effectiveness;
- and holding prompt bipartisan budget talks.
Malloy said his budget proposal is based on using an approach similar to zero-based budgeting and limiting spending to actual revenue projections.
“This budget is based not on how much we want to spend, but how much money we actually have to spend,” he said.
Among other things, the governor wants to:
- enact the state spending cap approved by taxpayers in 1992;
- enact a transportation funding lock box to guarantee funds for improvements;
- refinance state employee pension debt, reducing the expected rate of return on those funds, and changing the expensive Tier One plan to a pay-as-you-go system;
- hold “necessary discussions between labor and management” to explore other changes to state employee retirement benefits “based on what we can afford, not what we previously spent;”
- and make state spending more transparent by posting detailed information from state agencies online.
The proposals are part of what Malloy referred to as a new economic reality facing the state.
“We live in changing times,” he said. “You hear it from your constituents every day – a visceral feeling that our country and our state are not going back to how things were before the Great Recession.
He acknowledged that Connecticut businesses “are making different decisions about how they hire, and the benefits they offer. They”™re looking at new technologies to fundamentally change how they operate, because if they don”™t, they won”™t survive.”
“We have to adapt even more,” he said. State government must “reset our expectations of what we can afford, how we provide services, and how we save for our priorities.”
Brennan refers to this moment in Connecticut history as a critical turning point.
Connecticut has made progress creating jobs and attracting businesses, but “not enough to sustain and support state programs and services and keep jobs and families in Connecticut,” he said.
“Lawmakers must come together and support real, long-term reforms so Connecticut can meet the competitive demands of a 21st century economy.”
Brennan said the legislature will now start the process of refining the revised state budget through the Appropriations and Finance committees, a process that may continue through May 4 when the current legislative session ends.
