House Republican Press Release

July 14, 2008

Press Office: 860-240-8700

Fiscal Year 2009:  Budget Adjustments Have Just Begun - Opinion by Rep. Vincent Candelora

Many people have been asking how Connecticut is facing a deficit when the state enjoyed a surplus just a year ago.  In past years when Connecticut has had a surplus, the legislature put some of it into a “rainy day” account.  This account currently stands at approximately $1.2 billion.  Given, however, that the Office of Policy and Management is projecting, based upon current spending, deficits of $170 million in 2009; $568.6 million in 2010; $818 million in 2011 and $630.8 million in 2012, we must refrain from raiding this account and first reduce government spending.

Connecticut sets a bi-annual budget, meaning in the odd years, the legislature creates a two year budget that the Governor must approve or veto.  In the even years, the legislature almost always will make necessary adjustments in order to account for under/over spending and revenue projection shortfalls.  This year, the legislature made the unusual decision to do nothing and make no adjustments to the 2009 budget. 

In 2007, when the legislature established its two year budget, the financial landscape was dramatically different.  Energy prices were stable, gasoline prices were much lower and the economy had healthy growth.  The Office of Fiscal Analysis was projecting a $260 million surplus.  When the downturn in the economy occurred, these projections quickly turned into a deficit, which is currently pegged at $19 million for 2008.  Corporate tax revenue has declined 14.1%; the real estate conveyance revenue is off by 21.5%; investment income is down 20%; and the “casino” money dropped by 5.9%.   These four drops account for approximately $200 million of the 2008 revenue projection shortfall.

Because the legislature did not adjust the budget to reflect these actual drops in revenue, the Governor has been handed the political hot potato and must address a projected 2009 deficit of $170 million, which is 1% of the overall budget.  The legislature consciously abdicated its responsibility to the public.  The Governor has been charged with the difficult task of making cuts and does not have the same flexibility that the legislature enjoys.  Pursuant to Connecticut General Statutes Sec. 4-85, the Governor may modify allotments if estimated budget resources are insufficient to finance all appropriations.  These modifications are known as “rescissions”, and cannot exceed more than 5% to any one account or 3% of any one fund.  Fortunately, no aid may be cut to municipalities. 

Under this statutory framework, the Governor is forced to make many small percentage cuts across the entire budget while holding the line in some accounts that are slipping into the red due to increasing cost.  For example, with the slowing economy, Connecticut is realizing an increase in HUSKY healthcare enrollment, thus increasing the expense beyond what was budgeted. 

While the general public may criticize her proposed rescissions, the true blame must fall on the legislature.  Families, seniors and all residents have gone through extraordinary measures to make ends meet.  The legislature had an obligation to do the same; rather we chose to ignore the political climate, punt the ball and now arm chair quarterback the Governor’s decisions.  The legislative leadership should work with the Governor and call us back into special session to make the necessary adjustments for the betterment of Connecticut.  Raising taxes after the November election is not the answer.  Connecticut must tighten its belt like every other Connecticut household.