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Good & bad in budget, surplus plans

Published February 08. 2014 4:00AM

Gov. Dannel P. Malloy is offering a modest, $19 billion budget for the fiscal year beginning this July. It would raise current spending by just 2.7 percent, stay within the spending cap and hold the line on appropriations. It would also begin work on a laudable goal to provide access to pre-school for all of Connecticut's 3- and 4-year-olds, and even offer some state assistance to parents beginning a college fund for their newborn children. In other words, in the long term his planning is not so austere.

It's a budget designed to make citizen-voters feel good this election year about a governor who rightfully takes some credit for the state's much improved fiscal situation. He reminded us a $3.6 billion deficit in 2010 is now a $506 million surplus, although it didn't materialize until the state borrowed $560 million last October to deal with a deficit that appears with a more honest accounting procedure - Generally Accepted Accounting Principles (GAAP), a procedure introduced by Gov. Malloy, fulfilling a campaign promise.

It's regrettable that the governor proposes using a big chunk of that surplus for tax rebate checks and other gimmicks, while legislative Republicans were making their own election year gift list.

The willingness to spend part of the surplus on what amounts to electioneering ignores other things that are still happening in Connecticut:

A Corporation for Enterprise Development study estimated that nearly 40 percent of Connecticut's citizens are living on the brink of a financial calamity, one lost job or serious health problem away from disaster.

Four hundred and thirty homeless people, including 42 families with 79 children, took shelter in New Haven on a recent, very cold night.

Another study, by George Mason University, ranked Connecticut 49th - only ahead of New Jersey - in overall fiscal health. The study said both states haven't raised enough revenues to keep up with expenses, didn't really balance budgets and funded projects with bonds that leave too much debt for future generations.

Unemployment is down but in Stonington, 160 people applied for two jobs in the police department, a dispatcher and an animal control officer.

Connecticut continued to rank near the bottom in the availability of affordable housing but at the top in credit card debt.

In short, the state still faces fiscal and economic troubles.

Neither party appears interested in using all of the windfall to pay down more of that awful pension gap of $44 billion or to put more in the state's reserve, Rainy Day Fund, as suggested by Comptroller Kevin Lembo. If you think taking just a few hundred million out of the surplus for election year goodies doesn't matter, Mr. Lembo points out that unanticipated revenues like the current $506 million added up to $5 billion over the past 20 years and none of it went to pay the state's debt. All of it was spent.

The governor first suggested $55 tax rebates to individual taxpayers who made under $200,000 last year. Then, he added another $228 million from the surplus and existing funds to exempt half of the retired public school teachers' pensions from the state income tax and eliminate taxes on clothing under $50 and nonprescription drugs.

All told, the governor would use $250 million from the surplus for the Rainy Day Fund and $100 million for debt reduction, both good proposals, it is the $155 million set aside for temporary "tax relief" that wreaks of election-year gimmickry. The sales tax actions are also favored by Republicans, who also propose $60 million in tax cuts for businesses by eliminating an assessment for unemployment compensation costs.

The rationale for all this is to give back what was taken from the taxpayers in the last financial emergency. Both parties insist their tax cuts won't increase the state's debt. They're neglecting to add that the cuts won't reduce it either.

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