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Structural Overspending: Connecticut's Real Fiscal Crisis
A version of this op-ed ran in the Republican-American (Waterbury) on May 7, 2007.
With only a month to go until the scheduled adjournment of the Connecticut General Assembly's 2007 session, there’s a light at the end of the legislative tunnel.
Unfortunately, it's the headlight of an oncoming train full of big tax hikes.
We've been here before -- and until the assumptions behind the Nutmeg State's spending habits change in fundamental ways, we'll be here again.
While Connecticut's political establishment would have taxpayers believe fiscal policy is complex and best left to "professionals," the core problem is easily understood. The Nutmeg State operates under "current services" budgeting -- i.e., it is expected that everything government does this fiscal year, it will do next fiscal year. Add to that approach a stagnant economy, rising healthcare and energy expenses, and the usual demands for new spending from lobbyists and left-leaning activists, and presto -- a "structural deficit."
There's a different way to approach Connecticut's expenditures, of course: Assume that the billions of dollars citizens send to the state treasury can be better spent.
The most promising place to start is with the cost of government employees. From gold-plated benefits to outrageously high salaries and wage rates, the cost to compensate state bureaucrats must be made to conform to reality. And since federal union law does not cover public employment, the power to make badly needed changes lies entirely in the hands of the governor and legislators.
Personnel costs are also driven higher by the state's refusal to seriously pursue competitive bidding. With appropriate government oversight, the private sector can offer public services at a comparable or even better level of quality, and usually at a much lower cost. Getting the nonprofit sector more involved in providing social services also shows great promise.
Connecticut's addiction to borrowing is another problem that can be easily addressed. There’s been a nasty turf war this session between Governor Rell and legislators over control of the bond commission, but the real problem with bonding in Connecticut is entirely bipartisan. Democrats and Republicans alike use the state's credit card in wildly irresponsible ways. While projects that contribute to the protection of property, safety, and public health should be funded, it’s time to adopt strict standards designed to weed out boondoggles and pork. Borrowing to subsidize giveaways to developers, as well as funds for inherently local projects -- e.g., a skate park, "open space" purchases -- should be banned.
Transportation spending is another long-overdue area for reform. Politicians shovel an inordinate amount of revenue to modes of travel few Connecticut residents use. Between 1980 and 2000, government transit’s share of the state’s commuting market dipped to 3.8 percent -- below the national average. (That statistic is stunning, given that Connecticut has one of the nation’s highest population densities.) A 2005 survey found that 95 percent of state commuters believed train travel would be impractical for them. Eighty-five percent thought the same about buses. Yet Governor Rell and legislators continue to parrot discredited clichés about how the state "can't build its way out of congestion” and the need to "get people out of their cars." All over the globe, revolutionary shifts are taking place in highway engineering and finance, but Connecticut elected officials obstinately cling to transportation policies that have little ability to unclog our roads.
It's also time to stop funneling big subsidies to Big Business. Analyses and investigative reports have long documented the ineffectiveness and corruption of Connecticut's corporate-welfare complex. The latest example of state government’s inability to make sound investment decisions is the Mortgage Lenders Network (MLN) debacle. At the groundbreaking ceremony for MLN's new headquarters in Wallingford last year, the governor called the company part of "the new financial services industry," adding that it would provide "the jobs we want for the future." A few months ago, MLN filed for bankruptcy. Hundreds of employees have been laid off, and according to press accounts authorities are considering criminal charges against the company’s president for failure to pay commissions to salespeople.
As long as Connecticut politicians believe that revenue grabs -- not spending reforms -- are the "answer" to budget shortfalls, taxpayers will remain trapped in an endless cycle of higher taxes. It is in the Big Government lobby's interest to keep taxpayers distracted with vapid debates about the "fairness" of competing tax-hike plans and facile schemes to cut property taxes through boosting grants to local governments. Doing so keeps attention away from the need to scrutinize state spending.
The Nutmeg State's unwise expenditure patterns aren't commandments chiseled in stone. Alternatives do exist. What Connecticut lacks is elected officials with the vision and courage to implement them.
D. Dowd Muska is the Yankee Institute's Philip Gressel Fellow for Tax and Budget Policy.
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The Yankee Institute for Public Policy, Inc. is a nonpartisan educational and research organization founded more than two decades ago. Today, the Yankee Institute's mission is to "promote economic opportunity through lower taxes and new ideas for better government in Connecticut." The Yankee Institute for Public Policy, Inc. is classified by the IRS as a 501 (c) (3) public charity. Contributions are deductible to the extent allowed by law.
