AG declares constitutional spending cap unenforceable

Attorney General George Jepsen (file photo)

Attorney General George Jepsen (file photo)

Connecticut’s constitutional spending cap, often a major weapon in political and policy fights, carries no legal authority because of the legislature’s failure to formally implement the measure, Attorney General George Jepsen wrote Tuesday in a legal opinion.

Jepsen’s opinion, which could have sweeping implications for budget policy as Connecticut faces a worsening fiscal crisis, held that a court probably would conclude legislators don’t need a special gubernatorial declaration and a three-fifths vote in each chamber to spend above the cap limit.

This new argument effectively refutes what has guided state officials since 1993: an opinion by his predecessor and fellow Democrat, then-Attorney General Richard Blumenthal. The constitutional language relied upon the legislature to define certain terms to put the cap into effect, but the legislature never did that, instead continuing to follow a statutory cap it had developed in 1991.

Blumenthal concluded that legislators, by taking no action on the definitions, effectively had designated the statutory system as a constitutional cap by default.

“We conclude that unless and until the General Assembly adopts the definitions that the constitutional spending cap requires by a three-fifths vote of the members of each house, the constitutional cap has no legal effect,” Jepsen wrote Tuesday in an opinion addressed to Senate Minority Leader Len Fasano, R-North Haven.

In simple terms, the opinion does not ease the growing fiscal crisis facing Connecticut. With nonpartisan analysts projecting a $1.7 billion deficit after the next election and the focus now on cutting spending, getting a simple majority for any budget measure is no simple task.

But legislators and governors, who’ve increasingly shifted costs outside of the cap as benefit expenses spiked over the past decade, might be spared that politically dangerous exercise in the coming years if Jepsen’s opinion is correct.

The attorney general’s argument could have one side effect: weakening Malloy’s argument for a new constitutional amendment as the best way to safeguard transportation funding from future budget cuts.

Fasano requested the opinion in October, about five months after leaders of the Democrat-controlled Appropriations Committee deviated sharply from past practice and determined that billions of dollars in pension contributions in the new biennial budget were exempt from cap limits.

Fasano immediately called Tuesday for the legislature to implement the constitutional cap.

“For far too long we have watched lawmakers and state leaders completely disregard the intent of the constitutional spending cap,” the senator wrote in a statement. “We’ve seen budgets passed that directly circumvent the cap. Senate Republicans asked the attorney general for this opinion to clarify once and for all that the spending cap in its current form is insufficient and does not protect taxpayers. This new opinion shows that not only is the cap being disregarded, it’s also not enforceable.”

Fasano added that, “Enough is enough. Our state needs a strong spending cap, one that cannot be sidestepped. In the upcoming legislative session, our caucus is making it one of our top priorities to see a true spending cap finally enacted. For 23 years the voters who overwhelmingly supported the cap have been disrespected and their wishes ignored. It’s time to give the voters what they asked for, and take action to prevent future budget crises.”

But Adam Joseph, spokesman for the majority Democratic caucus in the Senate, said “the attorney general’s opinion is in line with our understanding and our practice concerning the spending cap.”

Born during the income tax debate

The 1991 General Assembly tried to temper outrage over enactment of the state income tax by drafting a statutory spending cap. Voters would add a requirement for a cap to the state Constitution one year later by adopting the 28th Amendment by a four-to-one margin.

The statutory cap was designed to keep the growth in most budget appropriations in line with increases in personal income or inflation.

There always have been some exceptions, including debt payments, aid to poor cities and towns, and spending necessary to comply with court orders.

It also contains a provision that allows the governor and legislature, if they agree, to modify the rules further or exceed the cap legally, provided two steps were taken:

  • The governor must sign a declaration of “fiscal exigency,” essentially declaring a budget emergency.
  • And 60 percent of legislators in both the House and Senate must agree.

The amendment that voters ratified set forth the basic parameters of a statutory cap, but also states the General Assembly “shall by law define” several of the key standards of the cap system, including how the growth in personal income or inflation shall be measured.

The legislature never took that step.

Given that, former House Minority Leader Edward C. Krawiecki Jr., R-Bristol, asked Blumenthal to clarify the situation.

Since the constitutional cap hadn’t been defined, Blumenthal wrote, the statutory cap effectively took its place. “The statutory spending cap remains in place until the General Assembly enacts the constitutional definitions,” he wrote.

Supreme Court bowed out of the discussion

A taxpayers’ group nonetheless went to court shortly thereafter, asking a judge to compel the legislature to define the cap.

But the state Supreme Court ruled in February 1996 that this was a political issue for the legislature, and not a question for the Judicial Branch to decide.

This 1996 decision, from which Blumenthal obviously couldn’t draw, plays a key role in Jepsen’s argument.

The high court’s majority indicated that if the 1996 General Assembly couldn’t set aside the cap enacted in statute in 1991 with a simple majority vote, an earlier legislature would be binding another.

“Those important principles serve to protect legislative prerogatives from gradual erosion and, indeed, to safeguard voters’ ability to elect representatives vested with authority undiminished by the acts and judgments of past legislatures,” the attorney general wrote.

And Jepsen made it clear Tuesday that he believes the principle behind this 1996 decision still holds.

“We base this conclusion on the well-established principles that one legislature cannot control the exercise of power by a subsequent legislature, and that when two laws conflict, the later enacted one prevails,” Jepsen wrote.

In a concurring opinion in that case, though, Justice Robert Berdon held that, while it is a political question, it wasn’t appropriately before the Supreme Court in 1996 only because enough time hadn’t elapsed since voters had ratified the amendment.

“We cannot excuse the legislature’s default by merely labeling it a political question and thereby rendering the issue nonjusticiable,” Berdon wrote. “Nor is it appropriate for us to conclude that the only remedy available to the people is at the polling booth by ‘kicking the rascals out.’ Our democracy depends in part on the willingness of the courts to enforce uniformly our constitutional law. We cannot be selective and choose to enforce some provisions while turning our backs on others.”

Berdon, however, was the lone justice to make that argument.

Cap increasingly controversial

Although it was designed to give some political cover to legislators who supported the income tax 24 years ago, the cap has become increasingly controversial for different reasons over the past decade as the budget has bent under the weight of spiking retirement benefit costs.

For example, the cap allowed less than 3 percent overall spending growth this fiscal year. But the payments to the state employees’ pension and retirement health care programs jumped 13 percent and 18 percent, respectively.

The solution of majority Democrats in the legislature last spring was to determine that retirement expenses represent debt and could be moved outside of the cap — although they never had been treated that way before.

This move, which sparked an outcry from Republican legislators and various taxpayer groups, was only the latest — and one of the most extreme — in a growing list of fiscal maneuvers around the cap.

Republican Govs. John G. Rowland and M. Jodi Rell working chiefly with Democratic majorities in the House and Senate, agreed to legally exceed the cap seven times in the late 1990s and early 2000s.

On five occasions, this involved spending surplus dollars just before the close of the fiscal years during boom economic times. And since many of those dollars were spent on pet projects in the districts of legislators from both parties, they encountered little opposition.

The 2005 session marked the first time a governor — Rell — and the legislature adopted a budget that legally exceeded the cap from its first day. The biennial plan they adopted then burst the cap by $371 million in the first year, a move that enabled Connecticut to secure major new federal aid for nursing homes and community-based social services.

Two years later, Rell and lawmakers used the same approach, this time approving a biennial budget that shattered the cap by a record-setting $690 million in the first year. This was done to launch two major initiatives: Rell’s proposal to dramatically boost local education aid, and a Democratic push to expand health care access for the poor.

Since taking office in 2011 ago, Malloy has refused to declare a budget emergency while repeatedly professing his allegiance to the cap. But that doesn’t mean he hasn’t bent to the cap’s weight. The steps he has proposed or approved include:

  • Redirecting $78 million owed to charter schools to cities and towns, which then forwarded the funds to the charter schools. Since state aid to poor municipalities is cap-exempt, almost 60 percent, about $45 million, moved outside of the cap.
  • Moving a federally funded health care program for poor adults outside of the budget reduced spending under the cap by $446 million in the 2013-14 fiscal year. Lawmakers proposed this change, and Malloy signed it into law.
  • Borrowing tens of millions of new dollars per year to fund municipal aid increases. These borrowed funds are outside of the budget, and therefore not subject to the cap.

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