Study: Connecticut one of few states spending above pre-recession levels
Connecticut is one of just seven states that has elevated spending above the levels budgeted before the recent recession, after adjustments for inflation and federal assistance are made, according to a recent study by a nonprofit fiscal policy think-tank.
But the Washington, D.C.-based Center on Budget and Policy Priorities also reported that Connecticut has made “deep identifiable cuts” to key services and its workforce and is one of just five states that balanced its cuts with “significant revenue-raising” measures.
The global economic downswing began in December 2007 and took a sharp downward turn in the United States in September 2008 as they Dow Jones Industrial Average lost more than 4,400 points in six months. Though most economists say the U.S. emerged from the Great Recession in June 2009, the recovery, particularly in the job market, has been slow.
“The cumulative effect of four consecutive years of lagging revenues has led to budget-cutting of historic proportions,” the center wrote in its study. “Even as states face rising numbers of children enrolled in public schools, students enrolled in universities and seniors eligible for services, the vast majority of states plan to spend less on services in 2012 than they spent in 2008 — in some cases much less.”
- 23 states have cut deeply into pre-kindergarten, K-12 education spending, or both. Mississippi will fail for a fourth consecutive year to meet statutory requirements to adequately fund school districts.
- 20 states imposed major cuts on health care. Arizona and Washington both froze enrollment in portions of their state-run health program for low-income residents.
- And at least 25 states have ordered deep cuts to higher education. Florida’s state universities are increasing tuition by another 15 percent, for a cumulative hike of 52 percent since 2009. Arizona has reduced per-student funding for public colleges and universities by 50 percent below pre-recessional levels. New Hampshire reduced its spending on its public universities by nearly 50 percent in just one year.
But the $20.14 billion overall budget adopted in June by the General Assembly and Gov. Dannel P. Malloy contains an $18.7 billion General Fund, commonly referred to the state’s operating budget. On paper, this far exceeds the $16.6 billion in operating spending from four fiscal years ago.
Many states were able to prop up spending during the recession by relying on emergency federal stimulus grants. “The loss of this federal aid leaves fewer states with fewer options — one of which is deep spending cuts,” the study adds.
Even after removing expenditures backed by federal aid, and adjusting 2007-8 spending for inflation, the share of Connecticut’s operating budget backed by state taxes, fees and other local sources currently stands at about $15.1 billion, up 2.7 percent from before the recession.
The study also found that New York, Maryland and West Virginia’s inflation-adjusted spending rose above pre-recession levels by less than 3 percent. New budgets in Alaska, North Dakota and Texas are more than 3 percent ahead of 2008 — but the two-year budget just enacted in Texas calls for deep cuts in 2012-13 that would bring spending back below pre-recession levels.
“I think we were really holding the line,” Sen. Toni R. Harp, D-New Haven, co-chairwoman of the Appropriations Committee said of Connecticut’s spending this year, noting that lawmakers repeatedly trimmed health care, social services and other safety net programs, both in the new budget and throughout the recession. “I think we cut as much as we responsibly felt that we could.”
Among the controversial cuts in the new Connecticut budget are reductions in Medicaid dental and vision benefits for adults, new limits on health benefits for low-income childless adults, and increases in cost-sharing for seniors receiving home care.
But if concessions are not granted, the governor has offered an alternate plan that relies exclusively on further budget cuts. That plan, which eliminates funding for over 6,500 jobs and closes nearly two dozen state facilities, would order much deeper cuts into social services, health care and higher education, including:
- Community- and school-based health centers.
- Residential placements for the developmentally disabled.
- Medicaid rates for physicians who treat the poor.
- HIV prevention services and support programs for AIDS patients.
- Reductions between 8 and 9 percent to the operating block grants for all public state colleges and universities.
Both Malloy administration officials and majority Democrats in the legislature note the new operating budget, though 4.7 percent above last year’s unadjusted level, spends $1.3 billion less than the amount projected as necessary to maintain current services.
Still, Sen. Robert J. Kane of Watertown, ranking GOP senator on the Appropriations Committee, said the new study shows Connecticut governmental spending doesn’t recognize the problems facing the nation–or its own population.
“I would venture to guess that individuals and businesses are not spending now what they did pre-2008,” Kane said. “But this legislature cannot grapple with the spending problem that it has.”
Kane said Malloy and the legislature’s Democratic majority could have reduced spending this year had been they been willing to look at areas their party traditionally has avoided–such as eliminating all use of unionized state employees to deliver social services.
“They’re not even close to ready to make tough decisions,” Kane added. “For them it’s all about revenue, revenue, revenue.”
The center’s study did note that Connecticut was one of just five states to impose “significant revenue-raising” measures. Malloy and the General Assembly ordered more than $1.6 billion in new state taxes, fees or expanded taxing powers for cities and towns.
By contrast, 12 states enacted large tax cuts.
- Michigan forfeited $1 billion by replacing a major business tax with a flat, 6 percent corporation levy.
- North Carolina ordered a series of business tax breaks worth $132 million this year.
- And Wisconsin legislators approved about $90 million in tax cuts aimed largely at corporations and the wealthy.
Malloy has noted repeatedly that many states that slashed spending either to avoid tax hikes, or to provide tax cuts, often did so by reducing town aid, effectively forcing tax increases at the municipal level. Connecticut’s new budget maintains the current $2.9 billion municipal aid program.
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