Tuesday, April 19, 2005

Democrats' Proposed Budget Would Shatter Spending Cap

Rell, whose budget also exceeds cap, furious

The Appropriations Committee voted yesterday to approve a Democratic budget that well exceeds the state's constitutionally mandated spending cap, drawing harsh criticism from Gov. Jodi Rell, who says she will not allow the increase to happen. Exceptions to the spending cap require the governor to either an emergency or the existence of extraordinary circumstances, which Rell has said she will not do for the Democratic proposals.

Rell has also proposed exceeding the spending cap, however, in order to provide more money for nursing homes. Democratic lawmakers apparently took this as a signal that she was willing to ignore the cap.

The Democrats' proposal includes the following:
--Allowing families making 150% of the poverty level to enroll in HUSKY
--Eliminating a $3 co-pay for Medicaid fee-for-service recipients
--Restoring cuts made to health services to legal immigrants
--Two more building inspectors
--An increase in funding for UCONN
--More money for municipalities and schools
(Lucas, Keating)

Appropriations Committee co-chair Rep. Denise Merrill said that Rell and the Democrats weren't that far apart. The Democrats plan to spend $261 million more than Rell the first year, $389 million the second--this may seem like very little compared to a budget expected to top $15 billion, but it's still significant. She also showed a distressing lack of understanding of the spending cap:

"I don't think the cap was ever meant to be a straitjacket...I think it was meant to be a guide." (Keating)

Some history for Merrill: The spending cap was enacted as part of the widespread response to the extremely high spending of the O'Neill years, which also included the implementation of the income tax. It was approved by the General Assembly and the voters in 1992. It states:

General budget expenditures authorized for any fiscal year shall not exceed estimated revenue for such fiscal year.

The general assembly shall not authorize an increase in general budget expenditures by the greater of the increase in personal income or the increase in inflation.
Link

Doesn't seem like a "suggestion" to me. That was certainly not the intent of the legislature and the people in 1992. Now, the spending cap has been violated before during the Rowland administration (Rowland in each case declared extraordinary circumstances or an emergency), so this sort of tinkering with it is nothing new. However, the Democrats in the Assembly apparently want to put the cap aside, as they have not clearly explained why their increases deal with extraordinary circumstances or an emergency of some kind.

The Rell budget is stingy in a few crucial areas (why slash health care for immigrants?) and somewhat strange in others (laptops?), but it at least appears to follow the rules set down by the state and the people thirteen years ago. Democrats need to strongly make the case for the most critical of their proposed increases (cities and towns, for example) and bring the governor to the negotiating table. Otherwise they risk losing both the increases and a lot of political good will.

Sources:
Keating, Christopher. "Democrats: Caps Off." Hartford Courant 19 April 2005.

Lucas, Fred. "Rell rips $31.7B spending proposal." Danbury News-Times 19 April 2005.

18 comments:

Anonymous said...

The money Rell is trying to secure for the Nursing Homes goes directly into the pockets of the private companies running the facilities. It will do little to stabilize the labor issues with the health care workers or dramatically increase care for seniors. On top of that, the nursing homes are still fighting to extend the time line to install sprinklers, which was mandated after the horrible nursing home fire in Hartford. Rell should calm down and try to work with the dems, instead of reacting so irrationally.

Genghis Conn said...

Anonymous,

Nursing homes are in an awful state, it's true. Rell is lucky that a strike hasn't blown up (yet).

I was a bit surprised by Rell's vehemence this morning, as well. She's usually pretty calm. They're going to have to work together and cut some sort of deal if they want to get anything done... I'm not sure that partisan posturing by either side will be productive.

Anonymous said...

If Connecticut imposes a Millionaire's tax, would that bring the budget back into compliance?

Genghis Conn said...

Anonymous,

I don't believe so, because the cap is tied to inflation and the increase in personal income, not to tax monies brought in. Here's what we use to calculate the increase in spending:
Expenditures cannot exceed the greater of the percentage increase in personal income or the percentage increase in inflation. Increase in personal income is defined as the average of the annual increase in personal income in the state for each of the preceding five years, according to United States Bureau of Economic Analysis data. Increase in inflation is defined as the increase in the consumer price index for urban consumers during the preceding 12-month period, according to United States Bureau of Labor Statistics data.
(from ct.gov.

dumbruss said...

So pretty funny stuff. Talk about a Catch-22. Hypothetically, you could need to up state spending to meet federal requirements (e.g. No Child Left Behind, Medicaid, etc.), raise taxes to balance the budget to meet those requirements, and fly over the spending caps without ever really spending a dime on anything other then keeping existing services constant. Then have the Republicans say that you are gratuitously spending money, going over the caps, and raising taxes to do so.

Anonymous said...

What happens if the governor doesn't sign off on breaking the spending cap? Would that mean both the dems and her budgets are dead in the water?

Genghis Conn said...

Essentially, yes. That's why there's going to be a loooong negotiation.

Scott Harris said...

I think so.

I am disappointed that the Democrats are going to fight Rell over the spending increases. Connecticut will face a deficit, and the Democrats will have no one to blame but themselves.

What the hell, we didn't want the Governors office anyways.

Genghis Conn said...

Scott,

Don't worry. The election's a year and a half away--anything could happen between now and then.

It would be nice to know what the three declared candidates have to say about the budget. Should the cap be exceeded? If so, why? By how much?

They are silent so far. I suppose I can't blame them.

Scott Harris said...

While I love your patronizing Genghis, I have to disagree.

Just because this issue happens now doesn't mean it won't come back up. Traditionally, the problem that Republicans run into in Connecticut is that they make the mistake of being socially conservative. If Rell runs on a socially moderate, fiscally moderate campaign (along with her astronomic approval ratings), she will win. Rowland ran a similar campaign and he crushed his Democratic opponents (even against Bill Curry when the allegations were first surfacing).

Democrats don't need to start blowing the spending cap. It will be remembered. They should be fighting to change the budgets makeup, shifting away from her whacky proposals to more responsible ones. It's okay to go over, but not by more than three hundred million. Voters won't forget it, because the State GOP won't let them - especially if they are fixated on keeping the Connecticut executive office.

Genghis Conn said...

Scott,

Didn't mean to offend. If I did, my apologies for a too-glib response. My point was that it does seem too early to give up on the governor's race next year (especially as none of the declared candidates are in the legislature--could help them) but I agree with you that ignoring the cap is very dangerous. Merrill's comment was especially stupid.

The constitution requires a balanced budget, which is actually more dangerous for Democrats since they'll have to raise taxes to get what they want AND violate the spending cap at the same time. Rell has played this pretty well so far, evoking nothing but a hissy fit from Amman.

Scott Harris said...

I am going up to the Capitol on Thursday, looking to get some calm in the mix of this budget disaster.

Someone needs to tell Democrats that this is not the way to go. Even I, a Partisan Democrat, see through this as the Party looking at the poll numbers and trying to hurt Rell in an issue they feel they can "stick it to her on". Like I said in my previous post, I think that restructuring the Governor's budget proposal is in order, but 300 million dollars over the cap (resulting in higher taxes) is all the state GOP needs for fodder in next years State elections.

Scott Harris said...

By the by, Robert Novak (conservative blowhard) has an article on our local Chris Dodd:

http://www.cnn.com/2005/POLITICS/04/14/bolton/index.html

ctkeith said...

I think you're all missing whats happening.

Every mayor,selectmam and other local politician is being crucified because of PROPERTY TAX.The State has to take their fair share and provide more money to the towns or an open revolt is going to happen.This Budget will begin the debate of the shifting from taxing property to taxing wealth.

Let the debate begin.

smalltowndem said...

There might be an immediate negative effect in my small Republican town. My first thought was, "Oh great, now our school budget doesn't have a chance."

We'll have our anti-tax Republican/Libertarian friends yelling about our school board being in league with the State Dems.

There might be a year and a half until the 11/06 election, but our school budget vote is in two weeks.

Scott Harris said...

CTKeith, I believe that is a pretty radical statement.

First of all, being a State government, there will be little *statewide* debate going on about what the legislature is doing (see same-sex civil unions, cell phone ban), especially if the majority agrees with it. In most cases, the legislature is protected from public opinion.

However, my point is this: The budget is not going to spark an overhaul of taxes in Connecticut. Yes, you may see proposals for a Millionaires Tax and things along those lines, but remember - Connecticut, locally, is not Blue Central. Voters will smack around Democrats who want to raise taxes just to pay for their oversized budget (Tax and spend Democrats, eh?). Just because our state voted for Kerry doesn't not mean we all love taxes.

In short, don't expect the state to visit an overhaul of our tax code just because Democrats can't keep their needs in order. Especially since, by the time such a proposal would come to task, it would be Election Season once again.

DeanFan84 said...

Scott--

I am 100% with you. With the Governorship very much in play, you would think this would be a good time to show some restraint. It might also be the time to talk directly to the people, and not just bray out partisan politics.

Jim Amman is either stupid, which I doubt, or he is allowing himself to be used for Rell's purposes. Does he want to remain the #1 Democrat in Hartford? 'Cause he sure isn't acting as if he wants to see a Democratic Governor in 2006.

Civil unions back to back with big spending. Brilliant.... sigh....

MikeCT said...

Do you honestly think someone is going to lose an election by advocating a millionaire’s tax over cuts to health care, cities and towns, and education?

The millionaire’s tax has consistently had about 70-80% support in public opinion polls. A November 2004 Quinnipiac poll finds “Republicans support it 63 - 35 percent and independent voters support it 80 - 17 percent.” Let Rell battle her own base! (Keep in mind that even Rowland once briefly agreed to a millionaire’s tax.)
http://www.quinnipiac.edu/x11362.xml?ReleaseID=557

And given a choice between Dem tax increases (on the wealthy) and Rell (on low and moderate income through “sin” taxes), guess which one they’ll support? See this paragraph from a March 2004 UCONN survey:

“When residents are asked which tax increase they most support, 40% pick the millionaire’s tax. Increasing the tax on cigarettes follows (33%), while 16% prefer the tax increase on alcohol. A small percentage of residents (7%) choose an increase in the state sales tax.”

If Rell wants to defend the wealthy over smart public investments, bring it on!