‘Budget crisis’? Just bad spending in Connecticut

Liberal Democrats in the General Assembly are warning that a “budget crisis” will descend on Connecticut in the next year or two because state government has gotten too economical, hamstrung by the state “spending cap” and “fiscal guardrails” imposed in recent years in response to chronic budget deficits.

In the liberal Democratic perspective, all sorts of things — higher education, financial aid to municipal education, transportation, medical care, and so forth — are being neglected even as state government maintains a huge “rainy day fund” and is running a big budget surplus.

But the complaint isn’t true, because state government’s actual financial position remains tens of billions of dollars in deficit. That is, the $3.3 billion in the “rainy day fund” and the budget surplus, lately projected at $3 billion, are just small fractions of state government’s unfunded pension liabilities. With state tax revenue estimates declining as the economy goes into recession, and with the financial markets falling and worsening the unfunded pension liabilities, the prosperity imagined by the liberals may not last the year.

Those who see the “rainy day fund” and the surplus as spare cash are really proposing to run the unfunded pension liabilities back up and extend them over many more years, during which taxpayers not yet born will pay them — pay for services actually delivered to their ancestors. This is state government’s equivalent of the federal government’s ever-growing deficit spending, which repeatedly requires raising the debt ceiling and causes interest payments to consume ever more of government’s revenue.*

This doesn’t mean that all compelling responsibilities of state government are adequately funded. Instead it means that Connecticut faces, and long has faced, not a “budget crisis” but a lack of the political courage necessary to set better priorities in spending. There money for the compelling responsibilities, but it’s not in the “rainy day fund” or the budget surplus. It is elsewhere in the budget itself.

The Connecticut Mirror’s Keith Phaneuf explained it succinctly deep down in his recent report about complaints of a “budget crisis” ahead.

The spending cap, Phaneuf wrote, “tried to keep spending growth in line with the growth in personal income or inflation. But what has happened, historically, is that a few cost drivers — employee wages and benefits, required contributions to public-sector pensions — grow faster than personal income and inflation. Everything else, like social services, health care, and aid to towns, is lucky if it stays flat.”

That is, in Connecticut the compensation of government’s own employees always comes first. State government is primarily a pension and benefit society.

Connecticut’s state government employees have been well paid but last year state government approved a new master union contract promising $700 million in raises over two years. A few weeks ago it approved $50 million in bonuses for state employees.

Meanwhile the poorly paid employees of the nonprofit organizations to which state government delegates much of the care of the frail and disabled have gone on strike because they haven’t gotten raises in 10 years, despite the recent ruinous inflation.

Higher education lately has been pleading poverty while the president of the top-heavy Connecticut State Colleges and Universities system is paid more than $350,000 a year and other administrator salaries exceed $200,000.

Last week the Connecticut Port Authority announced another cost-overrun for the redevelopment of the New London State Pier for offshore wind turbines. This overrun is $47 million, bringing the new estimated total price of the project to more than $300 million, more than three times the original estimate of $93 million.*

A true liberal in the legislature might question these and other anomalies before complaining of a “budget crisis.” But the General Assembly fails to investigate anything of substance. Most recently it has even delegated to others a study of how to prevent the recent street takeovers, as if ordinary arrests, prosecutions, and imprisonments wouldn’t work, and a study of whether “non-binary” should be added to the gender section of state government forms.

As the maxim goes, to govern is to choose. Governing better requires choosing better.