‘Odd couple’ co-chairs played key roles in historic budget debate
It took a long time — nearly four months into the fiscal year — but when the General Assembly finally managed to approve a 2 billion cap on bond authorizations.
A volatility cap will force the legislature to base income tax revenue projections on a baseline determined by averaging revenues over time. This will avoid the past practice of boosting spending to reflect projected spikes in income tax revenues, projections that in recent years have often fallen short, producing budget deficits.
If tax revenues exceed these more conservative projections, the new cap calls for the excess to be used to pay down long-term obligations — such as debt service or closing the gap on underfunded pensions — and not be used for ongoing expenses. A three-fifths super majority would be necessary to ignore the volatility cap requirements.
While these caps impose fiscal discipline on the legislature, they do not magically address the fundamental problem that the state’s expenses continue to exceed projected revenues. Projecting forward on current spending obligations and anticipated tax revenues, the Office of Fiscal Analysis estimates the legislature will face a $4.6 billion deficit when it starts work on the 2020 and 2021 fiscal-year budgets, following the 2018 election.
Formica was excited about the reforms his party achieved in pushing its agenda.
“We are on the road to being able to solve these problems,” he said. “This is the beginning of a future that moves in a different direction.”
Osten was more circumspect about the challenges ahead.
“I’m going to put a little dose of reality into that,” she said after listening to her co-chair. “I still think we have long-term problems that we have to deal with. We have not solved our deficits in the out years. And we need to do a lot more work revolving around that.”
This spirit of cooperation may well disappear during a bruising election-year fight in 2018 for control of the legislature and the governorship. If it only proves to be a shooting star, here and then gone, it will have at least pushed state spending policy in a new direction. Connecticut needed that.
Paul Choiniere is the editorial page editor.