The General Assembly met in special session last week to take a small but important step towards addressing the projected deficit for the current fiscal year. We could and should have done more to reduce the deficit, but given the General Assembly’s traditional reluctance to make any meaningful cuts, what was accomplished last week was a step in the right direction.
Currently, the projected deficit for this fiscal year is approximately $300 million. Projected deficits for the next two fiscal years are estimated to total approximately $6 billion. The anticipated deficits for the next two fiscal years use the current budget as a starting point. That is why it is so important that we tackle this year’s deficit with aggressive budget cuts; doing so should improve the overall picture for the next two-year budget that we will adopt in the coming year. Furthermore, experts believe the economic downturn will shrink the state’s tax revenues by two to three percent, while inflation and fixed costs will increase state spending by about seven percent.
The magnitude of the problem for this year is the reason I say that we should have done more in the deficit reduction bill that was passed. This bill reduced the current year deficit by approximately $72 million. This was accomplished through a series of spending cuts, accelerating the implementation of the “Money Follows the Person” program, which should allow the state to receive more in federal funding, and enacting a tax amnesty program at the state level. In light of the size of the projected deficit for this year, by refusing to take more action at this time, the majority chose to defer the painful decisions that will have to be made to another day. I believe we needed to do more now and that the decision to hold off on the tough choices we will face may only make them harder to make. Nevertheless, I am pleased that the General Assembly was willing to follow the Governor’s lead and make some cuts now.
In addition to enacting legislation to reduce this year’s projected deficit, the General Assembly also approved a bill that is intended to make it easier for municipalities to manage the tough fiscal times they face. Among the key provisions in the bill were those enabling three or more municipalities to come together to form purchasing groups for equipment and supplies, extending the amount of time that municipalities can borrow money using temporary notes before being required to issue bonds, and enabling towns and cities to enact local tax amnesty programs. It is our hope that these provisions will offer our cities and towns some additional tools to manage the financial hardships that we all face.
I would like to hear from you regarding the state’s budget problems, and any suggestions you may have for resolving them. I can be reached at my legislative office in Hartford at 1-800-842-1421, or via e-mail to sam.caligiuri@cga.ct.gov.
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