Opinion by Rep. Laura Hoydick
Earlier this month the Office of the State Treasurer released a report with some rather startling news – Connecticut is borrowing millions to cover the costs of operating expenses and state employee salaries, even though the Malloy administration would have you think we are on firm footing following a $1.8 billion tax increase retroactive to the beginning of 2011.
Prior to December of 2011, State Treasurer Denise Nappier had noted that having an operation balance of $600 million on hand is inadequate to cover the state’s obligations to vendors, employees, municipalities and beneficiaries.
Yet, just before December of 2011, the state’s cash balance fell to $195 million, just 13% of the state’s available cash. To put it in better perspective, $195 million is roughly about what it costs to run the state for about two and a half days.
We have also now learned that according to the state’s nonpartisan Office of Fiscal Analysis that general fund is operating at a projected deficit of $145 million. The Governor has now ordered $79 million in budget recisions, but that won’t be enough.
Additionally, the state employee compensation negotiated by Governor Malloy with the State Employees Bargaining Unit Coalition which was projected to save $8.3 billion over 20 years is on track to save less than half of that according to the latest actuarial valuations. While I joined many of my colleagues in expressing skepticism that this agreement could have such a high yield, Governor Malloy dismissed these concerns and never provided any documentation that they could be achieved. Now it appears we were unfortunately correct, and they cannot.
This poor fiscal management resulted in the downgrading of Connecticut’s bond rating earlier this month by Moody’s Investment Services, one of three significant Wall Street credit rating agencies.
The truth here is that while every other state in the nation was finding a way to cut back and do more with less, our new governor built a budget that actually spent almost a billion dollars more while increasing taxes on residents nearly $2 billion to make it possible. We have gone backward while the rest of the nation is moving forward to deal with their fiscal difficulties.
With the downgrade in the state’s bond rating it will now costs all of us more to borrow the money we shouldn’t be borrowing in the first place. These continued practices will escalate our financial problems and make us among the last of the states to recuperate from the “Great Recession.”
When you consider the size and scope of what taxpayers have been asked to do, it really seems unconscionable that our cash flow situation would be so desperate.
Next month the legislature will be convening for a “short” budget-related session. It is an opportunity to begin to make some serious and meaningful changes to this slipshod way of running the state.
