Connecticut is spending too much, according to a report released by the state’s largest business lobby last week.
The Connecticut Business and Industry Association’s report — entitled “Turning the Tide: Fiscal Policy Changes, Best Practices and Ideas That Work” — said that the state spends “beyond its means” and that there has been little effort by policymakers to make “tough” fiscal decisions in the short term. State spending has increased more than 153 percent since 1992, with spending for state employee retiree health services and pensions increasing 981 percent and 583 percent, respectively.
Over the same time period, spending for debt service has grown 204 percent and Medicaid 180 percent, and spending for the state corrections system has increased 178 percent.
While the report attributed much of the increase in spending to a greater need for social services caused by the weak economy, it also cited Connecticut’s aging population as a growing fiscal issue and warned that Connecticut’s substantial state employee retirement benefit plans lead to long-term financial promises the state cannot keep. The report added that the estimated $63.9 billion in long-term obligations the state owes might be less than the true cost due to a change in how the liability is calculated.
Peter M. Gioia, vice president and economist of the Connecticut Business and Industry Association, said he is worried about the state’s economic future.
“We are very concerned about the state fiscal picture, and our members are too,” he said.
Connecticut’s debt plus unfunded pension liabilities constitute a fraction of its GDP greater than any other state’s, according to an article by Barron’s cited by the report.
The report also criticized Connecticut for cutting spending in areas it states are necessary to Connecticut’s economy, such as education, health and human services. Since 1992, the CBIA’s report said, state spending for education has decreased by 21 percent, while spending for health and hospitals and human services has decreased by 11 percent and 7 percent over the same time period, respectively, according to the report.
Gian-Carl Casa, undersecretary of legislative affairs of Connecticut’s Office of Policy and Management, said he does not think the report gives enough credit to Connecticut Gov. Dannel Malloy’s budget reforms.
“The Governor’s first year in office, we cut spending by over a billion and a half dollars from what statutes required,” Casa said in a statement about the report. “The Governor has made a significant and meaningful effort to reform education and invested in education despite federal budget reductions. He has invested in economic development and brought thousands of jobs to the state.”
State Sen. and Chair of the Connecticut General Assembly’s Appropriations Committee Toni Harp, who hails from New Haven, said she does not think high spending has caused Connecticut’s fiscal woes. Instead, she blamed the weak economy for reducing tax revenue, explaining that the “spending problem” is actually a “revenue problem.”
Among the policies the CBIA’s report suggests could help reduce state spending are privatizing certain state services such as inmate health care and motor vehicle registration, encouraging the use of home-based long-term health care and increasing state cooperation with nonprofits.
“None of our suggestions cost clients services,” Gioia said. “Streamlining government should improve the quality of services and responsiveness. Rebalancing long-term care will give clients the services they prefer and save costs.”
Yet despite his calls for reform, Gioia said he is hopeful about Connecticut’s future.
“I am an optimist, but fiscal solvency will require change which is always resisted by some,” he said.
Malloy will present his budget to the Connecticut General Assembly on Feb. 6.