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My Left Nutmeg

Connecticut's spending cap and the need to restore checks and balances.

by: TimOBrienCT

Wed May 30, 2007 at 15:20:57 PM EDT


(A good piece for those looking to understand the budget as the legislative session comes to a close. Bumped. - promoted by mattw)

Back in the early 1990s, Connecticut was in the middle of a massive budget crisis that ended with the establishment of the state income tax.

They were tough times, and people wanted state government to be held accountable for spending.  And the legislature responded by offering a constitutional amendment that created what is now known as the "spending cap."

Of course, everyone supports preventing runaway spending of the taxpayers' money.  And the choice given to voters on the ballots was a strong statement of a sentiment that no one could oppose:

Shall the constitution of the state be amended to impose a limit on state expenditures?

Unfortunately, the simplicity and common sense of what the people overwhelmingly voted to approve as part of the State Constitution has been undermined by the complexity, unintended consequences and Constitutional instability caused by the details of the Constitutional amendment, itself.  And this was a failure of the politicians who created these details.

TimOBrienCT :: Connecticut's spending cap and the need to restore checks and balances.
For example, while it is intended to limit state spending, it has, in reality, driven up state debt.

And while the wording of the question the voters actually approved was very simple and logical - having "a limit on state expenditures" - the real application of the spending cap is a morass of complex accounting.

Furthermore, since the enactment of this Constitutional provision, some politicians have suggested that it means something that the voters were never asked to support - banning the people's elected officials from ever creating new or expanded public services, even when the people want their elected officials to do so.

But, there is yet another little known permutation to this provision that most people do not know.

I sometimes get questions from people asking, if Democrats are in the majority, why we do not simply go ahead and approve a budget that contains the things that we believe in.  It may seem to some that we are only giving lip-service to wanting to fund education, health care and property tax reform, when the legislature does not vote to do this.

The answer is that one of the practical effects of the constitutional spending cap is to give nearly total power in the budget process to the Governor.  As the Christopher Keating, in the Courant, described,

Democrats can vote on taxes without Rell's consent, but not spending. All budgets proposed this year - by the Republican Rell, legislative Republicans and Democrats - exceed the state spending cap, which cannot be topped without Rell's permission.

When he refers to the Governor's "consent" to vote on a budget, he is referring to a part of the Constitutional spending cap that says that the legislature cannot approve a budget over the spending cap unless

the governor declares an emergency or the existence of extraordinary circumstances

And it is not just this year that the state is over the spending cap.  It is never under the spending cap.

In fact, every year going back into the Rowland administration, the governor (both Rowland and Rell) has approved a consent to spend over the cap.  This means that all of the budgets of the state, containing the services that public expects - and that elected officials of both parties have approved - have, in practicality, been over the cap.

And, what this means that that, the "governor's declaration" is not really reserved for "an emergency or the existence of extraordinary circumstances", but has, as a practical matter, become a normal part of Connecticut's budget process.

So, instead of the budget process being:
1. The Governor proposes her budget.
2. The Legislature votes to approve a budget.
3. The Governor signs the budget.

It is now:
1. The Governor proposes her budget.
2. The Governor gives the legislature permission to vote on a budget she agrees with.
3. The Legislature votes to approve this budget.
4. The Governor signs the budget.

Even if the legislature has the votes to override a Governor's veto, it still cannot even vote for a budget unless the Governor says it is allowed to. 

This greatly diminishes the role of the legislature in our Constitutional system of checks and balances.

Matters are made worse by a precedent set by Gov. Rowland in 2003.  In the budget crisis of that year, Rowland approved an executive order in which he unilaterally gave himself the power to operate the state without a budget approved by the legislature.  His act was allowed to stand because the legislature did not challenge its legitimacy.

This creates a "heads I win, tails you lose" advantage for the Governor over the legislature in the budget process.  If the Governor really wants to, she or he can tell the legislature, "I will run the state without you until you see fit to approve a budget I like."  This is exactly what Rowland did in 2003.

Combine this with the fact that the legislature cannot even vote on a budget without the Governor's permission, and the Governor can go so far as to say, "I will not even let you vote on a budget until it is one that I like."

As the John Rowland scandals proved, it is never a good idea to have nearly unfettered power in the hands of just one person.  As John Dalberg-Acton said:

absolute power corrupts absolutely

In spite of this, our state continues to operate under a system in which the most important decisions - those on the budget and state bonding - are vested in a single, nearly all-powerful individual.

I believe strongly that elected officials should work hard to make government more efficient and cut real waste.  And a common sense limit on the spending of taxpayer money makes sense.

But, preventing a repeat of what happened in the Rowland era will necessitate that legislature re-asserts its Constitutional responsibilities in our system of checks and balances, and most especially in the budget process.

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Couple of Questions (0.00 / 0)
Representative O'Brien,

First let me say thank you for an informative post on the current situation.  As we have seen over the years the impact of constitutional logjams can have a negative effect for many people.  I wanted to ask a couple of questions. 

First

How has the spending cap created state debt?  Is Governor Rowland public works agenda related to the spending cap causing debt?

Second

It's my understanding that the legislation used to apply the spending cap was considered "emergency" legislation that was supposed to be replaced by a better law after the passage of the constitutional amendment. 

Given the current and future problems the spending cap would cause (basically an extra veto by the governor) and that the constitutional amendment gives the legislature the power to define "an emergency or the existence of extraordinary circumstances" wouldn't now, with a veto proof majority, be a better time than in the past to push reform of the cap?


cap and debt (0.00 / 0)
I'll take a crack.

How has the spending cap created state debt?

Because bonding does not count as "spending" under the cap's tight restrictions, so there is an incentive to borrow for necessary expenses, even for operating expenditures (rather than, capital expenditures).  This has led to massive debt for the state.  (I'm not familiar with Rowland's bonding preferences.)

...wouldn't now, with a veto proof majority, be a better time than in the past to push reform of the cap?

Yes.


[ Parent ]
I agree with both of these answers. (0.00 / 0)
And borrowing money to meet the needs of the state is, of course, because of interest payments, a worse option than simply having a more rational approach to deciding how high the regular state budget should be.

It is very clear that John Rowland used the state bonding system as a tool for rewards and punishments to other state and local elected officials to ensure the unchecked power of his corrupt administration.  The reason he could do this is because his almost total power over hundreds of millions of dollars per year of state bonding.  The real decisions over state bonding were made with little public accountability, behind closed doors.  And they still are.  This is not a good system.

That is why it important to establish more transparency and accountability to the state bonding process.  Personally, I think that the decisions to approve or reject all major state capital project should be part of the normal state budget process, where the public can see what is proposed, and by who, and hold the people who do them accountable.

Finally, yes, I hope that all Democrats in the legislature will come together to reform the state spending cap law.

Rep. Tim O'Brien


[ Parent ]
Thanks for the reply (0.00 / 0)
nm

[ Parent ]
. (0.00 / 0)
I'm not going to try to answer - just wanted to post to say hi to a first time commentor. Welcome to the monkey house, mate!

–7.25 / –7.28 | http://imgs.xkcd.com/comics/tw...

[ Parent ]
thanks for the welcome (0.00 / 0)
nm

[ Parent ]
I tried to find the link in the CEA Advisor (0.00 / 0)
about the budget caps, but the best I could locate was
this

Teachers union now backs Dem budget 
Gregory B. Hladky , Capitol Bureau Chief 

-HARTFORD - Connecticut's biggest teachers union, which had run TV ads supporting Republican Gov. M. Jodi Rell's budget proposal, announced Thursday that it has now decided to back a Democratic budget plan.
John Yrchik, executive director of the Connecticut Education Association, said his union spent about $150,000 on television commercials touting Rell's proposal to dramatically increase state school spending and to raise the state income tax to pay for it.

But he said the union changed its mind shortly after the TV campaign was aired and that the trigger for that reversal was Rell's call for a state-mandated cap on local property tax increases.

"The governor's proposal changed in a very critical respect," said Yrchik. "This was not a trivial change in the governor's position."

Yrchik and other teacher union leaders argued that the Democratic plan, even though it allocates less money for local education than Rell's proposal, is more balanced and has a fairer tax system.

Rell's budget chief, former state Sen. Robert Genuario, said the union's change of heart wasn't unexpected. "I'm disappointed but I'm not surprised," said Genuario.

The governor wants to cap local property tax increases at 3 percent a year, unless there are extraordinary circumstances. Rell argues that a major reason for increasing state school spending by $3.5 billion over five years is to remove the rising burden on property tax payers.

She says placing a cap on local tax increases is a responsible way to insure local tax relief.

Genuario said the part of Rell's plan that bothers the teachers union is that it would allow the tax cap to be considered as part of binding-arbitration decisions in municipal union contract disputes.

"It has a provision in it which acknowledges that in binding arbitration … the property tax limit has to be taken into account," said Genuario. He said the cap would show that there is "a limit to what taxpayers can pay and to what arbitrators can award."

"That's problematic for them," Genuario said of the teachers unions.

You want problematic? How about knowing that there is a 7 BILLION DOLLAR SHORTFALL IN MY RETIREMENT ACCOUNT!!!! Now that makes me very nervous.



The NY Times update from Jennifer Medina (0.00 / 0)
However, after her biased coverage of Ned Lamont during the race, I have reason to doubt her veracity on every issue to date:

http://www.nytimes.c...


Democrats' stand on principles. (0.00 / 0)
Sometimes the disagreement is more exciting to talk about than what the disagreement is about.

What is happening right now is a very important debate about fairness for the future of the state.  The Democrats' budget would make significant new investments in education and property tax reform, health care and human services.  And it would make significant progress in making our state's tax system fairer
  - including lower taxes for most people.

Especially since Gov. Rell has essentially abandoned her education funding proposal, the most significant thing for which she is advocating is to keep the wealthiest people from paying 1.5% more on their state income taxes.

This is an important and principled debate that is important for the future of our state.

Rep. Tim O'Brien


[ Parent ]
 
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