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Wed May 29, 2013
What Is The State's Constitutional Spending Cap?
If you've been following the negotiations over the state budget, you've no doubt heard three words: constitutional spending cap. But do you know what they mean?...Neither did WNPR's Jeff Cohen, who brings us this report. What is the constitutional spending cap? "The constitutional spending cap was adopted as part of a broader political agreement to get majority support for the adoption of a state income tax." That's Bill Curry, a Democrat and one-time state comptroller, talking about the law that is now two decades old. "The idea was, we're opening up such a big source of new revenue that we need a better check than the democracy itself. We need to build into the constitution a limit that will stop this from just exploding public sector spending." And he says the limit would be this: spending from one year to the next couldn't increase by more than the increase in the rate of inflation or personal income, whichever is higher. Makes sense, right? How about this -- if inflation were to go up three percent, the budget couldn't go up 3.1. And that is the constitutional spending cap. And how's it worked out? Not terribly well, if you ask Curry -- who has run for governor as a Democrat. He says the limit has meant state spending couldn't keep up with the growth of the state economy in good times. And in bad times, when more people need state services, the limit has left them needing more. He also says another side effect of the cap is that it has pushed lawmakers' pet political projects off of the state's operating budget and onto its borrowing -- or bonding -- rolls. "We borrow the money to grease the system." Now, Governor Dannel Malloy and fellow Democrats want to rethink the cap as they negotiate a budget. Malloy wants to stop adding in federal Medicaid money as he crunches numbers on state spending. Republicans have cried foul. But Curry says to not change the system would be self-defeating. "It just puts more strain, both in terms of taxes and services, on Connecticut residents. Getting rid of this is the smart thing to do. It never should have been there to begin with." Earlier this week, Malloy said a budget will be passed before the legislative session ends on June 5. For WNPR, I'm Jeff Cohen.