Latest Policy Brief: Pension Debt and the Spending Cap
The latest Yankee Institute policy brief looks at lawmakers’ plan to move pension debt payments out from under the constitutional spending cap.
Read it here: Yankee Institute Pension Debt and the Spending Cap
The spending cap protects taxpayers by limiting growth in state spending in the years when they can least afford it. By moving payments to the state’s pension systems out from under the cap, the protections the spending cap provides to state taxpayers will no longer be applied to this debt.
The policy brief raises the following points:
– Connecticut’s pension debt is getting worse even though the state is now paying over $2 billion a year into these funds.
– The pension debt went up 7 percent in two years – from $24.5 billion in 2012 to $26.3 billion in 2014, according to reports issued by the comptroller.
– Connecticut’s public pensions are the most generous in the nation.
– Payments to the state’s pension funds are crowding out other government spending, which is leading to lawmakers wanting to increase taxes.
– Moving pension debt payments out from under the cap will result in less scrutiny of this growing debt, and its cost to Connecticut taxpayers.
– Lawmakers want to make this change to the spending cap without a 3/5 vote – something that could be illegal.
– The fiscal note on a 2013 bill to remove pension debt from the spending cap calculation said only $440 million in pension debt would be moved out from under the cap – significantly less than the $1.8 billion moved this year. Why the discrepancy?
– The pension debt was not moved out of the base year for the purposes of recalculating allowable budget growth. When the pension debt is removed, the budget proposed by the Appropriations Committee is $280 million over the cap.
A recent Yankee Institute poll of 1,006 likely voters shows the spending cap is still very popular among Connecticut residents.
We are asking lawmakers to respect the cap as it stands, and to only redefine the cap the proper way – with a 3/5 vote by the legislature.