Like the rest of the country, the economy is the number one issue that I hear about from people these days as I meet them out in the communities that I represent. It is obvious that our national economy is suffering, but it is also becoming more evident every day that the Connecticut economy – and the state budget that depends on it – are also in serious trouble.
The Connecticut state budget is based on a fiscal year that begins July 1 and ends June 30. The fiscal year that just ended on June 30, 2008 finished with a small surplus. Unfortunately, the state budget for the current fiscal year and beyond appears to be heading towards significant deficits. Both the Governor’s budget office and the General Assembly’s nonpartisan budget office have told us to expect a $300 million state budget deficit for the current fiscal year, and to be prepared to possibly see that deficit grow to more than $2 billion over the next two years. In the last few days, the state Comptroller estimated that this year’s deficit could be approximately $800 million.
Whatever the final number turns out to be, I believe that the heart of the problem in Connecticut is that state government spends far more than it can reasonably expect to support with the tax revenues that we are likely to receive. A prime example is the current two-year state budget that was approved in 2007. At that time, we had a surplus of approximately $800 million. Unfortunately, the final budget that was approved by the General Assembly and the Governor spent approximately $600 million of that surplus on recurring expenditures. That meant that when the surplus disappeared – which was just a matter of time given that most of it was based on capital gains revenue – we would have a hole in our budget of approximately $500 to $600 million. I voted against the budget because I believed that it would lead to substantial deficits, which in turn would lead this General Assembly to raise taxes. I oppose tax increases because they hurt families, small businesses and our economy, which has been weak overall for many years.
I mention this history because it will be important for people to remember it as they hear the debate among state policymakers about how we ended up with such substantial deficits and what the best way is to solve them. It will be easy for lawmakers and others to blame the downturn in the national economy and the resulting decrease in tax revenues as the cause. There is no doubt that is part of the problem. But if we had spent within our means as a state, I believe that we would have been in a much better position to weather the storm that we now face.
I suspect that the debate about the state budget over the next several months will come down to whether people believe that we have too little revenue or too much spending. In my view, we have too much spending given what we can reasonably expect to be a reliable source of state revenue. Accordingly, the answer to our budget problems will be to cut spending not raise taxes. To raise taxes would ignore the fundamental cause of the problem and actually worsen the crisis.
I want to emphasize that most of the programs and services that state government provides are worthwhile and important. I do not want to focus on budget cuts rather than tax increases because I do not see the value in what state government does for people. But the problem is more basic than that. However noble these programs are, we are simply spending more than we can afford to as a state right now. If we raise taxes to pay for more spending, I believe that we will further weaken our economy, which in turn will lower the amount of revenue the state can expect to receive, and we will find ourselves in a vicious cycle of budget deficits that will be very difficult to pull out of.
In the months ahead I hope that you will let me and other legislators know how you feel about this issue. Your feedback – and the amount of it that we receive – will go a long way to influencing which solutions the General Assembly ultimately embrace for addressing this problem.
As always, I would welcome any feedback that you may have. I can be reached by phone at (800) 842-1421 or by email at sam.caligiuri@cga.ct.gov.
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