Even if you live in Connecticut, you are probably more familiar with the budget crises in New York, New Jersey or California than you are with the budget crisis facing our state. Chances are you can even probably identify our neighboring states”™ cast of characters by name. Can the same be said of Connecticut?
The importance of Connecticut”™s upcoming elections cannot be overstated, as those sworn into office will be responsible for righting fiscal policies that for years have undermined the strength and functioning of our state.
States are feeling the impact of the recession through unprecedented revenue shortfalls, and Connecticut is no different. Currently masked by the one-time savings net offered by the federal stimulus and the “rainy day fund,” Connecticut could face significant deficits of up to 16 percent of budget in fiscal year 12, 14 percent in FY13 and 12 percent in FY14.
These deficits are unprecedented in Connecticut”™s history. And while California has been dubbed the financial basket case of the nation, Connecticut has suffered multiyear deficits on par with California.
Connecticut”™s record borrowing pace has resulted in one of the largest long-term debt loads in the nation. Recent data indicate Connecticut has accumulated more than double the national debt per capita, ranking 4th nationally at $6,812, and ranking higher than New York and New Jersey.
While it would be tempting to blame Connecticut”™s fiscal situation on the recent recession, it would be inaccurate. What the recession has done is unmask a structural imbalance in the state”™s fiscal policies that has been building for years. Simply put, Connecticut has promised more than it can responsibly deliver.
It is not, as some have said, “just a revenue problem.” It is unquestionably a spending and efficiency problem.
Even when Connecticut was recording healthy surpluses and building the rainy day fund, the state workers”™ pensions and retiree health care programs were woefully underfunded. Today, Connecticut has unfunded liabilities for pensions and retiree health care that exceed $41 billion ”“ placing us as the third worst in the nation. According to recent data from the National Association of State Budget Officers, Connecticut”™s annual required contributions for these liabilities makes up 12 percent of the state”™s total expenditures, ranking the state third worst after New Jersey and Nevada.
The cost of paying for the commitments made to the state”™s teachers and employees is staggering and will impact the ability of the state to fund ongoing current operations and programs long into the future. This fiscal imbalance, coupled with the aging of Connecticut”™s population and the resulting increases in health care expenditures, is the central challenge facing the state”™s public officials and citizens.
The fiscal condition of the state is poor and must be restored. If ignored, any efforts to improve education, transportation, the environment or the economy will be fruitless.
So at this critical juncture, let”™s not get lost in the jabs and rhetoric that are commonplace in an election season. Come Nov. 2, we each have the opportunity to choose candidates we think will fix our current fiscal crisis. We encourage you to review the facts of the state”™s balance sheet and to determine if, and how, our gubernatorial and legislative candidates are proposing to not only close a historic budget deficit, but how they will establish a framework for sustainable government.
Joseph J. McGee is vice president, Public Policy and Programs, at The Business Council of Fairfield County.
