Examining the $320M spending hike for FY 2020
We’ve devoted a lot of time and energy sorting out the size of the tax increase wrought by the state budget, but what about changes in spending? That’s seen scant focus from us scribes in the faithful media, certainly compared with the tax side.
Spending will rise by $320 million in the general fund for fiscal 2020, which starts in less than two weeks. It comes out to a 1.7 percent hike.
For the following fiscal year, starting July 1, 2020, the spending increase in the recently adopted budget amounts to $663 million, or 3.4 percent, on top of the increase we’re about to see. That’s excessive.
We’ve got an entire legislative session starting next winter to knock down the fiscal 2021 plan. That won’t happen, but because it can, we’ll stick to the fiscal 2020 numbers for the moment, the $320 million.
A little more than half of that 2020 total, about $170 million in all, comes from raises and step increases for the bulk of the 45,000 state employees — the union members who agreed in 2017 to three years of pay freezes, followed by raises of 3.5 percent for two years.
This is the first of those 3.5-percent-raise years.
There was little or nothing the General Assembly and Gov. Ned Lamont could have done about it this year. Lamont tried, in fact, to extract a $20 million giveback from the unions in his budget proposal, in the form of adjusted cost-ofliving increases for retirees — and that went nowhere.
All in all, the $320 million figure is manageable but could have been smaller. Republicans, of course, say Lamont and Democrats in the legislature put out little or no effort to cut spending. They’re right, although, in past years, the spending jump would have been far higher in a year with raises of 3.5 percent.
“At this point in our evolution there should not have been any spending increase at all,” Rep. Gail Lavielle, R-Wilton, the House chairwoman of the appropriations committee, said Monday when I asked for her overall assessment.
It’s hard to point to any one big thing that lawmakers could have controlled, that pushed the total from $170 million to $320 million.
Medicaid, for example, amounts to about $75 million more (out of $2.6 billion, the state’s share), mostly because of higher underlying costs. There was one policy change that restored coverage for some 26,000 parents who had lost coverage a couple of years ago. That was going to be financed with a tax on opiates, part of a health reform plan that went down in flames, but the Medicaid restoration stayed in.
Then there’s an added $60 million for education in poor cities. We can debate that another time; it’s part of $3 billion headed to cities and towns, level with the year that’s about to end. And if you think that number can be cut, spend one day at the Capitol for a fast mental correction. It cannot fall as long as we have local elections, period.
Lavielle believes the $9 million or so in what we might call pork-barrel spending for groups such as politically connected Boy Scout troops is mostly new spending, and she might be right. Two weeks after the budget passed, we still don’t have public documents comparing line-item to line-item, though we do have a general view.
For example, the state agreed to spend $20 million a year for five years to match $100 million from Dalio Philanthropies, to set up a sort of quasi-public corporation to help at-risk schools. The debate over whether it should be a fully public agency is worthy but that’s a good investment.
And we have $5 million toward the $20 million cost of setting up a paid family and medical leave program. Connecticut workers — you and I — will pay 0.5 percent of our salaries, a total of $400 million, for that program. But it’s not what we’d call “on-budget,” so it’s not part of the spending increase.
Is it a state spending increase, any way we slice it? Yeah, and that will kick in in future years. Democrats call it a social insurance program and that’s fine — it’s pure semantics.
Not including that $400 million, the tax increase for the coming year totals abou $340 million, including added taxes and delayed credits and tax cuts that had been previously scheduled. Like the increase in spending, it’s not terrible considering where we thought we’d be. We’ve seen a $600 million surge in tax collections since last November.
Will that surge hold up? Skeptics say no. We’ll have to see.
Drilling down on those employee pay raises, on top of the 3.5 percent jump, the average employee receives a “step increase” of 2 percent, for a total of 5.5 percent.
If you’re outraged because you’re not getting anything close to that, consider some givebacks: State employees agreed to pay an extra 2 percent toward their retirements, and added amounts averaging perhaps another 1 percent for health coverage.
All told, that means over five years, state employees will have seen net pay increases totaling 8 percent, or about 1.6 percent a year. That’s not profligate, especially since the step increases often go to lowerpaid workers. But of course, it’s more than Republicans would like to have seen.
Lavielle and other Republicans are especially upset over $20 million in raises for a dozen separate contracts that were not part of the massive union contract, which the General Assembly approved this year. That includes, for example, hefty raises for assistant attorneys general.
“What if we had voted no? It would have gone back to arbitration and we don’t know what the answer would be,” Lavielle said, “but it could have gone down.”
Those contracts included raises for low-wage childcare providers who are not state employees but are working for state agencies — and who will see increases pegged to the rising minimum wage.
We’ve been talking about ways to cut spending for years, and former Gov. Dannel P. Malloy — who eliminated 4,000 full-time, executive branch employees — did a decent job of it despite what you may think. He was cursed with sharply rising debt, pension and health costs.
The 2018 Commission on Fiscal Sustainability and Economic Growth suggested the state take proposals from outside consultants with the goal of saving $500 million in spending cuts and more efficient tax collections. Malloy sought those proposals, and three came in, Robert Patricelli, co-chairman of the disbanded commission, told me Monday.
But we’ve yet to see a contract for any of them. “There are definitely places where they could have achieved more by way of expense reduction and collection improvement,” Patricelli said.
That’s worth pursuing with an eye on that $663 million hike. The time for action on it is now, this summer.