HARTFORD, CT — A commission created by the General Assembly couldn’t reach consensus on the issue, but some lawmakers and Democratic Gov. Dannel P. Malloy are still hoping three-fifths of the General Assembly will finally approve a constitutional spending cap.
The Appropriations Committee will hear testimony Monday, April 3 on 17 bills pertaining to the state spending cap.
Twenty-five years ago, afraid that spending would increase following implementation of an income tax voters overwhelmingly approved a constitutional spending cap. But the General Assembly never defined it.
Attorney General George Jepsen opined in 2015 that Connecticut’s spending cap has “no current legal effect.”
Shortly after Jepsen’s opinion lawmakers voted to create a commission to work on recommendations to the General Assembly. However, the 24-member commission couldn’t even reach a consensus this past winter on how to define a working spending cap.
Even with 17 bills in support of instituting a spending cap on the Appropriations Committee public hearing agenda Monday, the devil will be in the details and it remains to be seen how much political capital will be spent on the issue.
Connecticut’s Constitution requires the General Assembly to define by law “increase in personal income,” “increase in inflation,” and “general budget expenditures.” These definitions must be passed by a vote of three-fifths in each house of the General Assembly.
Some of the legislation on Monday’s agenda asks lawmakers to define sources of spending that should fall under the spending cap. Some only asks for definitions of “increase in personal income” and “increase in inflation.”
Malloy’s proposal, which defines all three areas of the spending cap, would exempt debt service, the budget reserve fund, federal mandates and court orders in their first year and “payment for unfunded liabilities in the state’s retirement systems.” It would also requires a base adjustment be made in the event that any expenditures are converted from an appropriation to another non-appropriated funding source. That later part of Malloy’s proposal would essentially give lawmakers a loophole to move money out from under the cap in extraordinary circumstances.
The struggle recently has been the pension payments.
An increase in recent years to the mandatory payment for state employee retirement benefits has posed problems for those looking to make sure there’s enough money in the state budget to fund education, health care and social safety net programs.
William Cibes, who co-chaired the Spending Cap Commission, proposed excluding certain pension payments required to fund the unfunded liability from the spending cap starting in 2022. Cibes’ proposal would bring spending on the unfunded portion of the pension liability under the cap once the payment has leveled off.
Republican lawmakers on the Spending Cap Commission opposed the idea.
They proposed including payments to the unfunded pension liability immediately. Then Sen. Rob Kane, who is now a state auditor, admitted the idea was unpopular within his own party because it would still exempt billions of dollars in pension payments from the spending cap calculation. However, they felt it was a better compromise than the five-year delay Democrats were putting forward.
The legislature and governors have approved bypassing or exceeding the cap as it currently exists at least 8 times over the past 25 years.
In 2013, Malloy and Democratic lawmakers were unable to get the votes they needed to get around the spending cap. They intercepted federal Medicaid reimbursements before they reached the general fund. The move essentially exempts them from being counted against the spending cap. Republicans opposed the move that year calling it a “gimmick.
In 2015, the co-chairs of the Appropriations Committee unsuccessfully attempted to expand the definition of the spending cap without legislative approval or a legal opinion.