Caution on budget can go too far

What is the purpose of a surplus?

The state has been racking up record numbers for years now, with intake above outflow by billions of dollars. The rainy-day fund is as filled as it can be, and much of the money that has come in has gone toward paying off longstanding retirement debt. The state of Connecticut, which continues to have some of the highest debt ratios in the country in its retirement systems, is making considerable progress on lowering those numbers.

That’s good for our credit and for our economic outlook. We can’t make fiscally responsible decisions without thinking about our longterm future.

But we’re also a state with nearterm needs. Not everything is about retiring debt that was racked up under previous administrations, when pension plans weren’t even funded. What are we going to do about the many people in need today? Isn’t that what a surplus should be for? Can’t we afford new and bigger programs to help people?

The answer, apparently, is no. Gov. Ned Lamont’s budget proposal, released earlier this year, shares a lot in common with the General Assembly’s Appropriations Committee budget, which came out this week. Both leave many people disappointed by failing to add much in the way of new spending on current needs. It turns out that surplus isn’t going to do much of anything.

The reason, lawmakers say, are the fiscal guardrails. These are a set of rules enacted in 2017 and renewed this year that direct excess funds toward paying down pensions, rather than towards new programs. Those guardrails have been credited by many parties, including the governor, with leading to the current surplus bonanza the state finds itself in.

That doesn’t make any sense. Tax intake has increased across the country in the past five years, with surpluses recorded in states under Republican and Democratic governors. The guardrails have cut Connecticut’s pension debt, but they have not led to the surpluses themselves.

And while legislators blame the guardrails for their lack of options on this year’s biennial budget, it can’t be stressed enough that those same legislators enacted those rules at the start of the year’s session with virtually no public debate. They created this situation, then they complain about how hard it is to operate under its strictures.

None of this is stopping the Assembly or the governor from pushing tax cuts. Somehow, it’s argued, tax cuts make sense under this circumstance but new spending would not. That’s nonsense. Either option would cost the state money, and both would be difficult to reverse if the economy goes south. Advocates are free to defend tax cuts on the merits, but don’t say they’re fiscally responsible in a way that new spending would not be.

We’re left, then, with modest increases in spending for education, social services and health care at a time when needs continue to grow. Connecticut is and will remain a devastatingly expensive place to live, and no state tax cut is going to change that. (Taking on big expenses, like housing, might.)

So what is the value of a surplus? To Connecticut leaders, not all that much.

While legislators blame the guardrails for their lack of options on this year’s biennial budget, those same legislators enacted those rules this year with virtually no public debate.