If you live in Connecticut, prepare to share in the pain of the state”™s enormous budget deficits and long-term debt. State government created the problem and the economy made it worse, but taxpayers and all residents will have to bear the burdens of the fiscal crisis.
Here are the main numbers: Connecticut”™s projected state budget deficit for the next fiscal year (2011-2012) is $3.4 billion. The state”™s long-term debt (for state employee health care, retirement funds, state borrowing) is about $60 billion.
Those numbers are not going to go away by themselves. They will not disappear with only a half-hearted trimming around the edges by the Legislature. We cannot wait for a rising economic tide to bail us out because most analysts expect that the state will not fully recover until 2015, even under best-case conditions.
Unless state government hunkers down to take strong corrective action, every individual in Connecticut will owe ”“ on top of their usual tax obligations ”“ an additional:
$960 to close the budget gap and
$16,740 to pay off the long-term debt.
If you have a family of four, your tab will be ”“ on top of your usual tax obligations ”“ an additional:
$3,835 to close the budget gap and
$66,965 to pay off the long-term debt.
Events and circumstances of the last 10 years have merely torn the veil away from what we should have seen: State spending has increased beyond our ability to pay for it. We have a state spending cap in place, but even still, budget increases have continued to speed by Connecticut”™s population growth and the rate of inflation.
Despite 9/11, the collapse of the financial services industry, the loss of more than 100,000 jobs in Connecticut and a very slowly moving economy, lawmakers have chosen ”“ so far ”“ to avoid dealing with the budget crisis.
Instead of reducing state spending they have tapped one-time “allowances” ”“ such as using up federal stimulus dollars and all of Connecticut”™s Rainy Day Fund. Lawmakers have overtapped the state”™s credit card. When confronted with budget shortfalls, the first response has been to look for more money to pay for it.
To be sure, actions taken by both the administration and the Legislature over the past two years have resulted in reductions in areas of the budget. Some agencies have made streamlining inroads. Policymakers”™ attention is being drawn to the work of the Connecticut Regional Institute for the 21st Century and others who are presenting constructive, long-term alternatives to such major spending obligations as health care and the prison system.
What”™s more, during this fall”™s election campaign most Connecticut voters told pollsters that they want government to do more with less ”“ just as they are.
Debate about the state budget has to focus on making government more affordable and more effective. The tall task now falls on our new governor and new Legislature. It”™s time to face the facts and restore fiscal responsibility to Connecticut.
Otherwise, the bill will come due ”“ for all of us.
Pete Gioia is vice president and economist at the Connecticut Business and Industry Association in Hartford. Reach him at pete.gioia@cbia.com.
