Tighten Up State Spending

Economic times are tough, and your family is likely tightening up its spending to make sure you can make ends meet. State government needs to do the same—with budget deficits starting to grow, we need to cut state spending to ensure we do not have to raise taxes or face massive state layoffs.

Following years of multi-million dollar surpluses, state government now has to deal with a $300 million budget deficit for 2009. Worse, this projection is before the current Wall Street crash. When you consider that Fairfield County accounts for about 45 percent of the state’s personal income tax revenues, it is not surprising some are saying our budget deficit may reach $1 billion dollars in 2009.

Connecticut is in better shape than some other states. New York and California are all looking at multi-billion dollar deficits equal to 10-15% of their General Fund. By contrast, our deficit is only 1.2% of our General Fund. Governor Rell has done an excellent job in ensuring our state deficit has not gotten as bad as these other states.

Nevertheless, a $300 million deficit is not something to take lightly. Governor Rell has already used her authority to make about $181 million in budget cuts, and to order a hiring freeze and travel ban. Thanks to her actions, we ended 2008 with a small surplus…but we need to do more to close the $300 million gap in 2009.

Too many politicians give vague promises when talking about how to balance a budget. Let me be specific in how I think we can close our deficit.

I am adamantly opposed to raising taxes to close the deficit. Families and businesses are already overtaxed in this state and it would be grossly unfair to further burden them, especially during these difficult economic times. The responsible thing to do is to cut spending – and tap in to the state’s $1.4 billion Rainy Day Fund only if we must, and only after having reduced spending as much as we possibly can.

So how do we cut state spending? Here is the three point plan I am proposing:

• First, we must hold all state departments and agencies to a rate of spending that does not exceed the rate of inflation. This is a more stringent standard than the one imposed by Connecticut’s constitutional spending cap.

• Second, we should implement the Early Retirement Incentive Program for state employees that I proposed earlier this year with other legislative Republicans. This would reduce the number of state employees by 8%, and save up to $150 million in 2009.

• Third, we must ask our public employees to share more of the cost of their state-provided healthcare. State employees currently pay minimal co-pays and deductibles relative to what private sector employees pay. Our unions need to give back a little so their healthcare payments are in line with private business. This could save hundreds of millions of dollars, and avoid the need for layoffs. While many public employees will not like this option, I believe it is preferable to layoffs—and a fair way to equalize the public and private sector healthcare benefits.

We also should look at the opportunity in this crisis—the opportunity to make sure that Connecticut is set to create jobs and lower taxes once the current recession ends. I believe my jobs-creation package will help towards this end, with tax credits for small businesses that create jobs, less regulation on small business, and incentives for “next generation” industries in Connecticut.

While I doubt we will be lowering taxes in 2009 given the deficit, I believe we can set up a system where we get automatic tax cuts in the future. My proposal is that whenever Connecticut has a surplus, it should automatically take 50% of the surplus and return it to the taxpayers. The only choice of the legislature would be which taxes to cut. The other 50% would go to debt reduction or to the Rainy Day Fund. The perfect time to implement this is now—because it won’t impact 2009. Instead, we would do something that government does all too rarely: plan for the future.

Much like your family, we legislators need to show fiscal responsibility to make sure our budget is balanced through showing a little restraint in spending. I believe we can avoid tax increases or employee layoffs with my spending control plan, and set Connecticut on autopilot with tax cuts once the economy improves.

Dan Debicella is the State Senator representing Stratford, Shelton, Monroe, and Seymour. If you have feedback for him or want to talk about the issues, he can be reached toll-free at (800) 842-1421 or by e-mail at dan.debicella@cga.ct.gov