It would be funny if it weren’t such a travesty. In order to appease taxpayers, lawmakers reluctantly agree to limits on revenue or spending. Then they while away the ensuing years trying to avoid the very limits they supported.
Such is the case with Connecticut’s constitutional spending cap. Enacted by both the General Assembly in 1991 and ratified by voters in a constitutional amendment the following year, the cap was clearly designed to mollify taxpayers who were incensed at then-Gov. Lowell Weicker’s advocacy for the state’s first-ever income tax. Indeed, some 30,000 protesters came to Hartford. Some of them hanged Weicker in effigy and spat upon him.
If they were to keep the income tax, Weicker and his allies realized they needed to do something to appease the masses who were angry at Weicker for breaking his campaign promise not to enact an income tax (Weicker said it “would be like pouring gasoline on a fire”). The idea was to limit spending increases to personal income growth over the last five years or the inflation rate for the preceding 12 months, whichever is greatest.
As surely as the sun rises, lawmakers exempted certain types of spending from the cap, including debt payments, grants to distressed towns and cities, the first year of spending related to court orders or federal mandates, and saving for the state’s so-called rainy day fund.
Two years ago the cap exempted Medicaid reimbursements and certain other federal spending. And lawmakers may change or exceed the cap with a two-thirds majority voted in both chambers.
But here’s a nifty little trick. In addition to both interest and principal payments on state bonds, the spending cap exempts something called “other evidences of indebtedness” — a term that is no doubt purposely vague so as to allow the spending class in Hartford maximum flexibility in avoiding the cap.
Therein lies the crux of the matter in the current imbroglio over reinterpreting the spending cap to exempt pension contributions and other-post-employment benefits for state employees.
Lawyers for Senate Democrats have determined that these unmet obligations fall under “other evidences of indebtedness.” The claim is of dubious legality, but these lawmakers say they have no plans to ask Attorney General George Jepsen for an opinion. Could it be that they’re afraid of what the straight-shooting Jepsen will say?
Unfortunately, this kind of behavior isn’t unusual among the ruling class. The same thing happened in Massachusetts in 1980 when taxpayers enacted Proposition 2½, which was an attempt to limit local tax levies to increases of no more than 2.5 percent. Among the exclusions from the cap were new grand list growth, municipal debt, and water/sewer debt. And then there was the Community Preservation Act, which many towns have approved, allowing a 3-percent surcharge to property tax bills for favored municipal and nonprofit projects.
And in California, there was Proposition 13, which in 1979 put strict limits on local property taxes. Proposition 13 had far fewer exclusions than in the caps in either Massachusetts or Connecticut, but in return for lower property taxes, lawmakers in Sacramento took over the almost all the funding of the state’s public schools. Yes, it was a large cross to bear, but it greatly enhanced the power of officials in Sacramento.
Now Connecticut’s legislators want to exempt from the spending cap the billions in unfunded liabilities caused by their own bipartisan failure to adequately fund the retirement packages of their own employees? They want taxpayers to loosen their reins so that they can do what they should have been doing all along?
It may be, as former Weicker budget chief Bill Cibes argued in an op-ed last month in The Courant, that these kinds of caps are unwise because of what NYU economist William Baumol calls “cost disease” — or the inability of some government services to gain efficiencies when those services require lots of humans and face-to-face contact. Among those sectors averse to automation, the main culprits are healthcare, social work, and education.
The problem is that Connecticut’s spending cap was enacted by Republicans and Democrats who did not want it. If lawmakers don’t want the spending cap, shouldn’t they have the courage to call for its elimination, as Cibes has?
They’re no doubt worried they’ll suffer the same fate as Cibes did when he ran unsuccessfully for the Democratic nomination for governor in 1990. He lost and so will most of the lawmakers who champion repeal of the spending cap.
To paraphrase Joe South, these are the games politicians play.
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