During yesterday’s public hearing on Connecticut’s constitutional spending cap – the cap that was supposed to keep a lid on state spending – AFL-CIO President Lori Pelletier appeared to be angling for some uncivil discourse as she launched into a litany of barbs directed at Yankee’s president, Carol Platt Liebau. First, Pelletier called the spending cap, a constitutional amendment overwhelmingly approved by a majority of the state’s voters in 1992, a “red herring,” intended to divert taxpayers’ attention from the implementation of an income tax.
In 1992, an overwhelming majority of voters approved a constitutional amendment that enshrined a spending cap in the state’s constitution. The cap was part of the deal lawmakers made with state residents with they implemented an income tax. But – after 24 years – the spending cap still has not been fully implemented. This is because lawmakers have failed to do their due diligence and define key terms in the spending cap definition.
What do permitting a third casino, legalizing marijuana and eliminating liquor price controls have in common? They all have politicians seeing dollar signs. Each of these policy directions have pros and cons and the potential for serious consequences if we adopt them. So they should not be made lightly. Unfortunately that is exactly how lawmakers are looking at them right now, or at least that’s how these policies are being sold by proponents. Don’t worry, supporters say, my policy will bring in revenue for the state.
Connecticut continues to struggle with budget deficits. In the past five years, our lawmakers passed the two largest tax increases in state history. And every year in recent memory the budget begins the year in balance and slowly falls behind as the year goes on. Why does this happen repeatedly, year after year? Here’s why: The cost of benefits for government employees is growing much faster than tax revenue. Some categories of benefits are growing nearly 10 percent each year while tax revenue is growing at 2 percent – at best. That means other aspects of government – services for people in need, road maintenance, town aid – face cuts even while overall spending grows. These benefits could be reformed, but they aren’t because of conflicts of interest present throughout the system.
It’s complicated. That’s the best way to describe the ongoing relationship between Gov. Dannel Malloy and Connecticut’s hospitals. Malloy has significantly changed the rules of their game since he took office five years ago - and the changes show no signs of slowing down. The past two weeks brought significant announcements highlighting these changes. First, Malloy intervened to prevent further hospital consolidation, a trend that raises concerns about increased costs and fewer choices. Then, worsening deficit projections led the administration to halt $140 million in payments to hospitals.
At the Yankee Institute, we will stand alone when necessary, but this time lawmakers overwhelmingly joined our side. Last week, the Yankee Institute was the only group to submit written testimony opposing a controversial UConn union contract, and our Policy Director Suzanne Bates was the only person to testify against it in person.