Hartford Business Journal

20 Hartford Business Journal • April 25, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Legislative process remains broken F or years, the Hartford Business Journal has alluded to the fact that Connecticut's legislative process is broken and that the challenges facing the state are too com- plex for the current crop of leadership in the General Assembly. The clown show that broke out last week in Hartford, in which House Speaker Bren- dan Sharkey and other Democrats refused to attend a planned budget meeting with Gov. Dannel P. Malloy — a move that prompted a verbal spat between the two leading Democrats over major philosophical differences in how to handle the state's growing fiscal crisis — only underscored our observation. Sharkey didn't like that Malloy targeted hospital and education funding, municipal aid and health and human services in his unprecedented second budget proposal that aimed to close next fiscal year's $922 million budget deficit. Malloy shot back, criticizing the legislature for not offering a balanced budget of their own, and again waiting until the waning days of the legislative session, which ends May 4, to pass a budget. There are a lot of factors in play here, and they all point to a dysfunctional legis- lative process. First, Malloy is right to criticize House and Senate leadership for not offering up a balanced budget until the end of the session. Such last-minute policymaking leads to a less transparent process and the adoption of poor policy in a rush to fill budget holes. Last year was a perfect example. After major outcry from the state's leading employers, some of which threatened to leave the state (General Electric eventu- ally did flee to Boston) legislators haphaz- ardly rolled back $178 million in planned tax hikes on data processing and web development services, among others, that were passed during the final hours of the 2015 legislative session. Although legislative leaders have sworn off tax increases this year, the business community should have little faith in legislator's ability to keep that promise, especially if last-minute deals are being hatched behind closed doors. Democratic leaders, including Sharkey and Senate President Pro Tem Martin Looney, have argued they are waiting to see if April 18 tax collections come in higher than expected before offering up a revised budget, but the clock is ticking and the public deserves a say on any spending package legislators consider. A simple alternative is to offer a worst-case-scenario budget that takes into account the latest deficit projections and then rolls back any cuts should tax receipts outperform expectations — an unlikely scenario. Such a move would increase transparency over the process and allow more time to openly debate the issues. However, election-year politics may be holding back good governance in this case — lawmakers don't want to pitch spending cuts that would upset constituents if those cuts may not even be necessary. Another issue is legislators' failure to come to grips with Connecticut's new eco- nomic reality, a catchphrase being peddled by Malloy. It is in fact true. Sharkey has said Malloy's proposed cuts were perceived as disrespectful to his caucus' priorities, particularly deep cuts to hospitals and local schools. However, the question remains: What's the alternative? There isn't enough low- hanging fruit to help close a nearly $1 billion deficit, meaning large spending areas such as municipal aid, state-employee benefits and Medicaid funding will be on the chopping block. These are the consequences of our elected leaders' years of financial mismanagement. Malloy too doesn't deserve to be absolved off all criticism. While we agree with his approach to cut spending rather than raise taxes, he doesn't appear to have a grand vision for his latest spending plan. He's making significant cuts to balance the deficit, but has failed to adequately explain how his budget — which reflects his administration's priorities — will lead to a brighter, more prosperous future for Connecticut. It's a vision that is cloudy at best. n OTHER VOICES State must adapt to new fiscal reality By Scott Bates I t's decision time in Connecticut. The greatest decisions surrounding govern- ment policy often come down to whether government has a spending problem or a rev- enue problem. In Connecticut, the answer appears to be both. Spending needs to be reduced and because the program requirements of the state's population have dramatically shifted, tax reform — not necessarily higher taxes — needs serious consideration. According to a report produced last month by the Connecticut Economic Resource Center Inc. (CERC), the aging Baby Boomer generation is putting a greater strain on government spend- ing, particularly as it relates to health care. At the same time, the responsibility to pay for these programs is falling on a much smaller popula- tion group, born in the post-Baby Boom years. As Gov. Dannel Malloy explained at the start of this year's leg- islative session, our state government is spending more than it is taking in. This is an unsustainable model that must be corrected regardless of the politics of the matter. Using basic math, it is clear the numbers do not add up, the budget does not balance and will not until we prioritize spending. Connecticut has a complicated tax system that has proven difficult to change. In the 1980s an over-reliance on the sales tax proved itself to be inadequate during recessionary periods, which led to the eventual implementation of the income tax, which at the time was consid- ered more stable. In recent years, however, income tax reve- nues have also proven unstable because of their sensitivity to fluctuations in the stock market. Even our transportation fund is threatened by falling revenues as cars use less fuel. Meanwhile, at the local level, an over-reli- ance on the property tax is making homeown- ership more difficult for many young families. The tax problem is a major issue that may take years to sort out. Short of that, the obvi- ous place to look when it comes to balancing the budget through common-sense policy is on the spending side. There are plenty of places to look, and due in part to Connecticut's current budget crisis, lawmakers are being forced to consider options they have ignored in the past. Returning to Baby Boomers and health care, Connecticut government leaders should be encouraged to continue support for poli- cies that allow senior citizens to stay in their homes and out of institutional settings for as long as possible. This concept is often called "aging in place" and a recent study, also conducted by CERC for the Connecticut Institute on the 21st Century, says this policy alone can save the state more than $650 million over the next 20 years. Healthcare policies centered on prevention can also save taxpayers money. There is early evidence that a prevention program instituted in 2011 for state employees is already paying off with a reduction in emergency room costs. There is a ten- dency in government budgeting to avoid making these types of changes because they are considered incremental and fail to solve immediate deficits, but we have to change that mind- set, because we sim- ply have no choice. Connecticut will dig itself out of the current fiscal crisis only when govern- ment leaders decide to adjust spending downward based on actual revenue. Our state will only return to a sustainable fiscal model when incremental changes — taken together — substantially reduce the cost of government. n Scott Bates is the executive director of the Connecticut Institute for 21st Century, a non-partisan, data-driven organization advancing public-policy solutions. Scott Bates ▶ ▶ The tax problem is a major issue that may take years to sort out. Short of that, the obvious place to look when it comes to balancing the budget through common-sense policy is on the spending side. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493. ▶ ▶ Another issue is legislators' failure to come to grips with Connecticut's new economic reality, a catchphrase being peddled by Malloy. It is in fact true.

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