February, 2010

The CT General Assembly is back “in session,” again.  So I thought I’d give you an opening assessment of how things look here.  There is a bit of a different feel, which is a good thing.  Fewer bills have been introduced, apparently reflecting a recognition by at least some legislators that new programs, new mandates, or new requirements are not going to be affordable in the budget or welcomed by the public.  My colleagues, both Democrats and Republicans, seem to be especially focused on developing proposals to encourage economic growth and job creation.

The best news is that there is some overlap in their ideas.  Proposals include:

• tax credits for job creation
• the review and elimination of counter-productive state business regulations, unnecessary paperwork and redundant data collection by the state (this echoes a bill which Senator Witkos and I co-sponsored last year)
• maximizing use of web-based government services to expedite permits, approvals, and other processes that can slow down a new business venture
• tax incentives for emerging industries, like energy innovation
• small business loans, since some small businesses are still having difficulty getting credit that might help them expand
• consolidation of agencies that work with small businesses, to make the system easier to navigate and more efficient
• an “angel investor” tax credit program to leverage private investments that support start-up companies
• providing technical support, incubator services, and mentoring to high potential entrepreneurs in the initial stages of development

Municipal governments are also challenged by the economy and looking to the legislature for relief.  The MORE (Municipal Opportunities and Regional Efficiencies) Commission was appointed by the House Majority Leader to develop ideas and tools to give to towns, so that they can achieve cost savings and lessen property tax increases.  The emphasis is on efficiency though regional collaboration.  But they are also exploring mandate relief, alternate revenue sources, and other options for towns.  Unfortunately this is not a bipartisan commission. 

The focus on jobs and the economy is appropriately placed.   While the national economy is showing some early signs of recovery, state governments across the country are in deep fiscal trouble – and CT is no different.

The latest update on state budgets from the Center on Budget and Policy Priorities (Recession Continues to Batter State Budgets, Dec. 23, 2009) reports that six states face general fund budget gaps right now – midyear FY 2010 – of more than 10% of their total general fund.  The six are Arizona, Illinois, Kentucky, New Mexico, Rhode Island, and Virginia.  The picture for the next state fiscal year, beginning in the summer of 2010, has even more red ink, with shortfalls in excess of 10% of general fund estimated for all but 13 states.

The National Council of State Legislatures reported in February that revenues declined steeply in nearly every state in 2009 compared to 2008.  States are forecasting a return to 2008 levels of revenue in 2014 or 2015 at the very earliest.  Many do not see a full return on the horizon at all.  Twenty-eight states saw income tax returns come in below estimates, even after they were recently revised downward.  Sales tax revenues are also below the most recent forecast in 37 states.  Corporate taxes are below target in 21 states.

In line with the fiscal challenges reported for nearly all states, the current state budget in CT has a serious shortfall.  Nancy Wyman’s latest estimate is that we have a $503 million deficit.  As much as she, and I, and others have urged legislative leaders for months to aggressively deal with this deficit, it appears to me that they plan to do little or nothing.  The time for action that can possibly affect this fiscal year is realistically nearly passed, since it is unlikely that the agencies could implement any cuts we might make, in time for them to result in savings before the June 30th end to the fiscal year.  However, at a minimum, we should be taking action now to mitigate the expected deficit in the coming biennium.

I am continuing to push for a restructuring of government, to recognize the new economic realitites.  We cannot continue to allow expenditures to escalate at rates far above revenues.  As more and more of my colleagues begin to fully accept that our current pattern is unsustainable, I am ever hopeful that we might finally turn this trend around.  But we have a long way to go!!!