Comprehensive action needed to balance state budget
When it comes to balancing state budgets there is a right way and a wrong way.
There is agreement across the political spectrum that all states face serious financial problems. We must find a way to lower the operating costs of government, just as companies have had to do for the past decade and longer. To do so we cannot simply mandate across the board cuts: We need a sensible plan of action.
We did not get into this mess overnight and we will not be able to get out overnight. As a matter of fact, an overly aggressive plan to reduce expenses will run the risk of sending our fragile economy, which is still recovering from the great recession, into a tailspin. I would suggest a three to five year window.
How do we go about making our state more efficient?
States have piled programs and agencies one over the other without much consideration to operating efficiencies. In Connecticut we have a myriad agencies and authorities that not only duplicate administrative and support services but also inflate the number of managerial jobs. We need to start here: Let us review all agencies, authorities and departments with an eye to eliminating redundancies, reducing management layers and streamlining processes.
Such steps will help us make government more efficient but we also need to reduce legacy costs, i.e. health care and pension benefits for current or future retirees. The only question here seems to be whether unions will agree to cutbacks or whether the governor will be forced to lay off thousands of employees. Gov. Malloy is taking the right approach by attempting to work with the unions instead of following Republican governors’ efforts to demonize unions, efforts that have little to do with balancing the budget. On the other hand, unions must realize that we simply cannot afford to raise taxes so that we can keep paying benefits for the few. Some Republicans are floating the idea of allowing states to declare bankruptcy as a way to unilaterally cut such benefits. Let us hope that we can find a reasonable solution without having to go to the extreme of, say, a General Motors.
But efficiencies should not be limited only to state employees. One legislator has made an interesting proposal: reduce the legislature by half. We are spending over $72,000,000 per year in support of the legislature: we have to reduce this number substantially. Let us start by eliminating all commissions as part of our move to make the legislative branch more cost effective. This is a question of not only cost, as the expenses are small when compared to the overall deficit, but also of message: We should make every effort to cut every dollar of unnecessary spending but also we need to focus on the common goals and solutions not just those the satisfy a particular segment of our population.
Lastly there is the debt problem. Interest payments on our state debt will amount to over $240,000,000 in the next fiscal year. As of June 30, Connecticut had outstanding debt of almost $26 billion, while our unfunded liabilities for pension payments amount to another $12 billion. We should allocate a portion of the above savings with an eye towards reducing debt and debt service. Additionally we must find a way to reduce the growth of debt by keeping it within a specified range of state GDP.
Cuts alone will not bring jobs to our state, and Gov. Malloy is correct as to the need to make investments in such areas as education, research, domestic and international economic development and transportation. How do we make Connecticut more competitive? It is not sufficient to provide a tax environment that is on par with our neighboring states. New York, Massachusetts and New Jersey have a number of competitive advantages besides taxes which Connecticut does not have. For us to be competitive with those states we must offer a lower cost structure, including taxes, as well as continue to offer a superior quality of life .
I am very encouraged by Gov. Malloy’s actions on the budget. While I don’t agree with all his recommendations I do feel he deserves a lot of credit for his proposals. I hope that all parties to these discussions will be able to see past their specific interest and think of our state and the future of all residents.
Paul Pirrotta is president of Paul Pirrotta International in Glastonbury and is a member of the Glastonbury Democratic Town Committee.
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