Office of Policy and Management Secretary Ben Barnes admitted Thursday that even if the General Assembly adopts legislation to change what counts and what doesn’t count toward the state spending cap, the 2014 budget would still be over the cap by about $600 million.
But Barnes said after receiving some criticism for this, he took it upon himself to go back through previous budgets to see if any other administration had been able to remain under the cap in the “out” years. “No governor has ever proposed a budget that is balanced and within the spending cap beyond the period for which they are budgeting,” Barnes said.
Rep. Craig Miner, R-Litchfield, told Barnes he was concerned about continuing to move the threshold for the spending cap in order to create space and minimize the debate. “I think we jeopardize what people thought we were doing,” when the spending cap was adopted, Miner said.
In 1991, the legislature enacted the spending cap shortly after implementing the state’s first income tax in an effort to temper public outcry. The cap was added to the state Constitution by voters in 1992.
But since the spending cap is tied to personal income, which hasn’t grown much over the past five years, the cap is tightening its noose around the state budget and the Malloy administration is asking the legislature for some breathing room.
The bill being debated during a public hearing Thursday would allow to the state to increase funding to the state employee pension fund, teachers retirement fund, and other post-employment benefit fund.
Miner, a member of the Appropriations Committee, expressed concern not for himself, but for those under the age of 50, who will be stuck paying for Connecticut’s spending habits.
Barnes said moving things such as additional payments to the state employee pension fund now out from under the cap, “gives us a much brighter future in living within our means.”
He said if Connecticut doesn’t begin beefing up its contributions to the state employee pension funds then its obligation, which would fall under the cap, will reach $2 billion. That would mean the state has $2 billion less to spend on “education, on social services, on parks and sportsmen programs.“
But can’t the legislature exceed the cap without legislation?
“Under current law we have the ability to exceed the spending cap — it requires a supermajority of people to weigh in on it — but this proposal imagines that under current law it is impossible,” Miner said. “That’s why I’m trying to separate the need for this now with the illusion.“
‘The illusion is if we do this it will somehow improve our cash status, but the driver of us not being able to pay our bills is we’re not getting revenue at a rate that is consistent with our expenditures,” Miner said. “Even if we put this in place that won’t change that ratio.”
Barnes didn’t necessarily disagree with Miner, but felt the legislation was necessary.
Rep. Tom Reynolds, D-Ledyard, said for all intents and purposes Connecticut has a spending cap that doesn’t work.
Over the 11 years that preceded the recession, the legislature and the governor agreed to exceed the cap 8 of those 11 years, Reynolds said.
“If we are unable to honor the cap in the good years that tells me the cap is unworkable and flawed,” Reynolds said. “I think we need to either mend it or end it and I think what you’re trying to do is mend it.”
The cap, according to Reynolds, incentivizes bad behavior and encourages the state not to maximize federal funding, encourages it to spend too much on tax expenditures, and encourages it not to fully fund the pensions because it all falls under the cap.
Barnes agreed with Reynolds and encouraged lawmakers to pass the legislation this year because it doesn’t go into effect until next year when the state will be dealing with its two-year budget. Next year is when the noose of the spending cap as it’s currently constructed would grow even tighter, restricting growth to 3.1 percent, according to legislative budget analysts.
“In the governor’s view and in my view this is the best way forward in achieving sustainable, responsible budget framework in the future,” Barnes said.