CT Voices Presents Plan for a Balanced Approach to Budget Deficit

A balanced approach – that’s how Connecticut can begin the monumental task of digging itself out of a $500 million budget deficit this year alone. That’s the approach that the CT Early Childhood Alliance’s statewide partner CT Voices for Children wants the Legislature and the Governor to take.

During a budget forum hosted by CT Voices for Children on Jan. 26, five speakers gave perspective on the overall budget, strategies for balancing budgets, the economic role that state government plays and evaluating state business tax incentives.

State Comptroller Nancy Wyman started the event off, noting that her office and the Office of Policy and Management have reached a consensus on the 2010 deficit – and it’s $500 million dollars. For awhile, the two disagreed by about $200 million.  The monumental deficit, Wyman said, comes from the 90,000 jobs lost since 2008 in the state (meaning a drop in income tax) and other tax revenues are down, with people tightening their belts and spending less, meaning less revenue from the sales tax.

“Nowadays, most people don’t invite me to come – I’m the bearer of bad news,” said Wyman.

And news doesn’t get better, she said. A $3 billion deficit is projected – approximately 17% on the $18 billion state budget – as federal stimulus money draws to a close. It’s going to mean tough decisions that the state is going to have to make.

“We’re going to have to cut spending, do some more borrowing and more revenue increases…taxes,” said Wyman. “If someone else has a suggestion, I’d love to hear it. It really is a challenging time.”

There is some good news, she noted. Economists are predicting an end to the recession soon, but with Connecticut being one of the last states to feel the recession’s impact; it will be one of the last to come out of it. Economists are predicting an increase in jobs by this spring, which means Connecticut may see an increase by summer.

Nicholas Johnson, from the Center on Budget and Policy Priorities, noted that Connecticut is certainly not alone in its fiscal struggles. Forty-seven other states are facing major budget shortfalls. State revenues, he added, take time to come back, even after a recession ends.

To battle budget woes, Johnson said many states are looking at changing revenue systems, drawing upon their built-up reserves and priority spending. Nationally, tax revenues are $87 billion down from where they were a year ago.

“How do you have a rational discussion about bringing it back into balance?” asked Johnson. The answer, or potential answer, is to think practical, think local and think recovery. Thinking practical would be a give-and-take approach by problem-solving; thinking local would be making the connection to things that are important in day-to-day life and thinking recovery would mean thinking about what it would take for meaningful recovery in Connecticut.

CT Voices for Children’s proposal calls for a balanced approach by spending smarter and creating a revenue system that is fair, efficient and adequate. Smarter spending ideas include sharing town services to reduce duplication, state agency collaboration and consolidation, conserving energy at state facilities, partnerships with state and local employees to reduce personnel costs, such as health insurance purchasing pools and creating a commission on enhancing agency effectiveness.

Long-term planning includes addressing the current revenue problem and insisting on government and budget transparency and accountability. The proposal includes evaluating and adjusting tax expenditures, evaluating and reforming the corporate tax system, a controversial idea to raise income tax for those most able to pay; delaying or repealing changes to the gift and estate tax and several other revenue options such as decreasing the sales tax but broadening the tax base and raising “six” taxes.

“Golden opportunities are often cleverly disguised as insurmountable problems,” said CT Voices for Children’s Executive Director Jamey Bell. “We can view it as a golden opportunity. We need to view it as a golden opportunity. We need to solve the problem for the next generation.”

Bell noted that some legislators have expressed interest in obtaining more information on the VOICES proposal, both among leadership and candidates.