The long life of questionable state budget decisions

The influx of federal funds in the wake of COVID-19 was designed to heal the financial pains of a once-in-a-century pandemic. With a record number of jobs lost and local economies stalled for months, the need was greater than ever.

What a lot of people probably did not foresee was the allocation of a majority of that federal money to pay for long-standing decisions made by lawmakers and governors who have not served in years. CT Mirror analysis shows that over 60% of the federal aid dollars in the new state budget that began July 1 will go towards consolidating public sector retirement accounts.

This action will be beneficial in the long term and will improve the financial positioning of the State. But it won’t do much to boost the state’s economy, nothing to make full-fledged business owners who have suffered for over a year, and nothing to bolster public health in times of crisis. persistent.

The state’s rainy day fund, where budget surpluses are used in times of crisis, is already filled to its maximum allowable level. This is an enviable position for the state to find itself, and the result of a steadily rising stock market in recent years, even at the height of the coronavirus outbreak. But since nothing more can be added to the rainy day fund, any excess money must go to pension funds or the teachers’ pension system, also run by the state.

This is a debate that unfolded during the legislative session as lawmakers and the governor argued over the need to raise taxes, which were ultimately avoided. One of the main problems was knowing that federal aid will end in a few years, calling into question the funding of all the initiatives that have been launched now. Tax increases, some lawmakers argued, were needed to ensure the continuity of these programs after the relief ended.

Final budget negotiations, however, sidestepped these concerns as some initiatives were postponed and discussions over funding for subsequent years were postponed to another day. In the meantime, government pension debt has once again dominated discussions.

It should be noted that the pensions offered to current government employees are very different from those offered in years past – most of the outstanding debt applies to people who are not in the workforce. state for many years. And although Democrats have long controlled the state legislature, unrealistic budget forecasts have been made under governors of both parties in the decades leading up to our current situation.

Connecticut is far from alone with headaches from long-standing budget decisions, but the state has retirement debt few others can match. Many steps have been taken to tackle this challenge in recent years, but there is still a lot of work to be done.

It shows how political decisions taken with short-term thinking can have effects that last well beyond the present moment. Every politician wants to please their constituents in the short term, but the dangers are many. Planning ahead is essential so that future generations are not left behind by this year’s mistakes. To its credit, the current leadership of the state seems to understand this point.

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