At a packed budget forum today, Gov. M. Jodi Rell’s budget chief Robert Genuario said placing surplus dollars in the state’s rainy day fund- a distinctly conservative option- helps the poor. Is he right?Robert Genuario, Secretary of the Office of Policy and Management.
Republicans constantly argue for putting more money in the state’s rainy day fund, saying it helps Connecticut’s bond rating and guards against future downturns in the economy. Democrats, though, often want to spend surplus dollars to beef up social services (although both Genuario and House Speaker James Amann (D-Milford) recently agreed that a chunk of the $525 million expected surplus for this year should go to shore up the state’s underfunded teacher’s pension fund).The rainy day fund is currently projected to hit $602.2 million this year, less than half the level mandated by state statutes, according to Genuario, who explained that because our economy will always be cyclical, stashing surplus dollars means programs won’t be cut as deeply during a recession.“Instability caused by this component of our budget does hurt taxpayers, but more than taxpayers it hurts the poor,” Genuario said. “If you look at some of the cuts in programs that were enacted in 2002 and 2003, and some of the flat funding of [programs]- when other expenses were going up- in 2002, 2003, and 2004, it wasn’t pretty. That can be avoided if we have an adequate budget reserve fund.“But some believe a reserve fund shouldn’t be the only safety valve for saving important programs, and that raising taxes can be an option.“I think that’s one way of looking at it,” state Sen. Toni Harp (D-New Haven), co-chair of the Appropriations Committee, said of Genuario’s view. “We can also raise the revenue that we need, when the revenue has gone down, to actually pay for the programs. That’s another way to look at it.“Because this is an election year, will politicians be more likely to spend money in flashier ways, rather than saving it in the rainy day fund?“I feel there’s going to be a lot of pressure to use the surplus to at least fund some of the one time items we had in the budget,” Harp said. “I know there is going to be a lot of pressure to put money in our cities. I would imagine the administration is going to recommend that, because the competition [for governor] is with mayors of cities. So there’s going to be an incentive for the administration to show they’re sensitive to cities.“Harp believes $100 million of the surplus should go to the rainy day fund, she said.