Getting a grip on state spending

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A democracy can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury… with the result of collapsing as victim to loose fiscal policy. 

The observation summarized above is generally attributed to Lord Woodhouselee of the late 1700s but is just as relevant today in our chronically ill state of Connecticut. The state is projected to face a $2 billion deficit next year and $2.6 billion the following year. Unless and until state government flattens out the rate of spending growth, it will continue being unable to meet the real needs of the people because it has over-obligated itself. Its revenue curve can’t keep up with its recent expenditure growth of around 5 percent annually. The recent blue ribbon commission on economic stability called for the state to get a grip on its spending. It urged the legislature to stop raising tax rates year after year as that becomes counterproductive as a revenue source. Increases have driven business and people to vote with their feet. After some of the biggest tax hikes in the history of Connecticut under Governor Malloy’s administration, even he weighed in against raising tax rates further for the very same reasons. As former Prime Minister of Great Britain Margaret Thatcher said in the 80s, socialism is great until you run out of other people’s money. 

To our north, the state of New Hampshire has neither the income nor the sales tax—yet it seems to be doing better than Connecticut in many respects. When the income tax was introduced in Connecticut nearly 30 years ago, it was supposed to solve all our fiscal problems. But as one often finds in government, without exercising fiscal restraint, more money just fuels the fire of more spending for the wish lists of those in government—and the special interests that help them get into office. In the end, with a myriad of perceived needs—some that are real and others just what some wish for—there is only so much money to go around. In our state’s case the greater rate of growth in funding to the municipalities is to the cities and not to the towns, the rural and suburban areas. These urban areas and the public sector unions in Connecticut feed well at the trough in Connecticut, and deliver the votes to keep the Democrat party in power in the legislature where the state budget is hammered out. For 40 years they have run it and bear significant responsibility for the high cost of state and local government, and the growth rate of state expenditures. 

Simply put, the state needs to get its fiscal house in order and flatten out its own cost curve. Given the deficits forecast for the next two years and beyond—essentially being short 10 percent+ in each year—the legislature just doesn’t have money to spend on new programs or increasing aid to the towns. It needs to pare expenses to balance out the budget, or raise taxes on the people of Connecticut. Even Governor Malloy made the point that the recent tax hikes really just went to cover the increase in public sector personnel costs (wages and benefits) rather than for new programs. At the same time the state employee count has been decreasing. Do we really want to see state taxes increased on ourselves as taxpayers when we only see about 20 cents on the dollar returned to the town as state aid for every buck the state collects from us? 

Does one think that throwing more money at the state, given its track record of fiscal irresponsibility, really makes sense? What we need is to elect more individuals who advocate fiscal responsibility. Only with a solid fiscal foundation can needs be effectively prioritized and met. Those candidates who say they will do everything for everybody are simply hustling for votes, and haven’t got a clue how difficult it is to break the public sector union stranglehold on their own Democrat leadership at the Capitol. The Speaker of the House is a paid employee of a major public sector union and it was only a few years back that the head of the Connecticut AFL-CIO was also head of the Democrat Party. Talk about having the fox right in the hen house. 

The best hope for Connecticut is for more Republicans to get elected from the towns across the state. The Senate is tied 18-18, and the House has only a slim D margin. Send our current GOP state legislators—Simanski, Kissel and Witkos—back to the capitol this election, and ask your friends and family around the state to do so as well. Connecticut can change… but only if the majority changes hands in Hartford. Connecticut can do better. It has to. 

Send more Ds up there? Well, I think Einstein said it best with the definition of insanity: doing the same thing over and over and expecting different results. 

Mr. Guarco is the chair of Granby’s Board of Finance.