• Priority-Based Budgeting

  • Pension Reform

  • Pay and Benefit Realignment

  • Spending cap implementation

  • Slow Rate of Borrowing

  • Sunset Regulations and Streamline Government Agencies

  • Budget Process Reform

  • State obligation recovery center

  • Municipal Mandate Relief With Aid Reduction

  • Medicaid Eligibility Reform

Priority-Based Budgeting

Long-term, Structural

  1. Start with zero-base budgeting. Adds spending restraints and waste controls.

  2. Determine what government should be doing, make sure it has the resources to do it well, and then measure whether a goal is being achieved.

  3. Washington State model. Agencies rank all activities as high, medium or low priority. Low priorities aren’t funded. All activities must be evenly distributed between the three categories.

  4. Washington State closed a $2.4 billion biennial budget gap without raising taxes using this method.

  5. Likely too late for this biennium, but steps should start being taken now to implement it in the next.

  6. Executive-driven process in Washington. An ideal CT implementation would be codified in statute, binding the executive to this process.

Pension Reform

Immediate, Structural

  1. SERS
    1. Yankee Institute recommendations: 10+ fully-modeled pension reform ideas presented as a list of options for ensuring the system remains solvent for years to come.

      1. Reforms include (but not limited to):

        1. Capping Cost of Living Adjustments to levels similar to Social Security

        2. Defined Contribution system for all new hires, or at least a hybrid Defined Benefit-Defined Contribution

        3. Raising contribution rates for new hires to levels similar to the rest of New England (still higher than national)

  2. TRS

    1. Many reforms similar to SERS recommendations, but able to be changed through statute.

    2. Give new hires the option of entering social security. May be a realistic option for young teachers who are unsure how long they will remain in the profession – if you leave before you’re vested you get very little. Also much more affordable.

    3. At the very least, increase employee contributions to national average of eight percent.

    4. Allow all new hires to enter plans managed entirely by the municipality, rather than the state.

  3. MERS

    1. Not a state cost, but a state-administered plan that results in higher municipal costs.

    2. Many similar proposals as SERS and TRS

Pay and Benefit Realignment

Immediate, Line-item

  1. Connecticut state employees are the second-highest compensated in the nation, even after accounting for cost-of-living.

  2. With all compensation taken into account (meaning pay and benefits), and with controls for education, experience, and regional cost of living, Connecticut state employees earn significantly more than their private sector counterparts.

  3. Negotiations are open now, General Assembly should vote on every contract to ensure some legislative oversight over contracts that have major budget impact.

Spending Cap Implementation

Immediate, Structural

  1. Governor and Republican budgets both recommend implementation, though with different strengths.

  2. The best spending cap is the strongest possible spending cap; every government dollar spent is one taken from taxpayers, and all spending should therefore be restrained and waste should be eliminated.

Slow rate of borrowing

Immediate, Line-item

  1. Connecticut borrows more per person than any other state.

  2. Bond ratings agencies are concerned with the state’s fiscal condition and economic outlook, meaning borrowing will only get more expensive.

  3. Connecticut has a borrowing cap, but it is weak. New York is a potential model.

Sunset Regulations and Streamline Government Agencies

Long-term, Line-item

  1. Examples include agency consolidation and regulatory reform.

  2. Given the high number of state workers who are university employees, there may be significant opportunity for savings without hurting the classroom. Arizona recently saved millions at its state universities.

  3. Indirect savings method. Reinstate the legislative subcommittee tasked with sunsets. Less unnecessary or obsolete regulation means fewer resources needed by the state and more growth opportunity (and tax revenue) from the private sector.

Budget Process Reform

Long-term, Structural
  1. Correct the order. Tax plan should come before spending plan. A common sense, logical approach that should mesh well with a stronger spending cap.

State Obligation Recovery Center

Immediate, Line-item

  1. New idea adopted and explored by states facing revenue shortfalls, including Oklahoma, South Dakota, Louisiana and Missouri.

  2. Not a debt collector, but a public-private partnership made available to all agencies. The center would specialize in collecting obligations owed to the state (though typically not tax delinquency). South Dakota found that the equivalent of 10 percent of a year’s spending was owed to the state (think overdue payments for hunting licenses, child support payments, etc.).

  3. SORC collects a surcharge so the state still gets 100 percent of the amount owed. Payment rates have increased by as much as 40 percent according to some estimates.

  4. Start with a study of money owed to the state to determine whether SORC is necessary.

Municipal Mandate Relief With Aid Reduction

Long-term, Structural

  1. Mandate relief includes minimum budget requirements, binding arbitration and prevailing wage.

  2. Allowing municipalities to reduce their own costs allows the state to reduce how much municipal aid it distributes.

  3. Helps make all 169 municipalities more solvent overnight, without bailouts, redistribution or property tax increases.

Medicaid Eligibility Reform

  1. Able-bodied adults without children or disabilities should be encouraged to work, leaving welfare programs for the truly needy

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