November 30, 2017

E-Notes: A Time to Give

In today’s email:

A Time to Give:

For more than two decades, Connecticut Voices for Children has provided advocacy for children across our state, calling for systemic changes necessary to increase equity in opportunity. Our research-based analysis and advocacy have made a difference in the lives of tens of thousands of children, leading to reforms such as the state EITC, which has lifted families out of poverty and removed barriers to children’s healthy growth and development.   

Our work depends on an ongoing partnership with you. Your financial support enables us to provide a credible and timely voice on critical matters, including our ongoing budget analysis and recommendations. Our voice is more important now than ever, given the state’s fiscal crisis and the structural problems that demand innovative, value-driven solutions. We believe that equity in opportunity for children and families should guide all budget and policy decisions. With your contribution, we can work together to make the dream of a better life accessible to all children and families across our state.

Policy Updates

Budget Deal: a Dangerous Spending Cap

Our recent Children’s Budget brief focuses on three policy changes in the budget which have received little attention, but have huge potential consequences for Connecticut´s children and families: the spending cap, the volatility cap, and the bond lock. As written, these three items will put limits on state spending, taxing, and fiscal policymaking, creating a fiscal straitjacket that could potentially put key state priorities in jeopardy.

  • The spending cap puts a hard limit on the growth rate of appropriated funds, based on prior-year spending, inflation, and personal income growth. The budget agreement includes new definitions for the spending cap which make it both more comprehensive and more restrictive, creating a likely crowd-out of discretionary funding for key programs for children and families as fixed costs increase.
  • The volatility cap is a new statutory rule which requires that any additional revenue in excess of fiscal year 2017 income tax collections be deposited into the rainy day fund. While this will have the positive effect of reducing the volatility of income tax revenue, it could limit the ability of future legislatures to raise revenue for current services through changes to the income taxe.
  • The bond lock takes effect in May 2018. This rule will make the state include a clause in all bonds promising not to change the spending cap, volatility cap, or bonding cap except in extraordinary circumstances for the next 10 years. As bonds are contracts, this would hamper any attempts by the General Assembly to fix the spending or volatility caps. It would also tie the hands of future legislatures, preventing them making investments in  much-needed infrastructure or responding to unexpected needs.

These three provisions create structural changes to our tax and budget system in ways that could limit our economic growth and undermine overall well being. Expect to hear much more about this issue from us in the coming weeks.

Budget News: Yet Another Deficit

While the bipartisan budget agreement put an end to months of uncertainty, it failed to address many of the underlying problems. In our in-depth analysis of the budget, we explained our concerns, from damaging cuts to key programs to short-term accounting tricks to close the deficit, without real reform.

Unsurprisingly, the short-term fixes have not been enough to keep the budget in balance, and the state has again slipped into a $203 million deficit. The General Assembly might have to reconvene again to pass a deficit mitigation plan once this figure is verified for another round of program cuts. Meanwhile, the CT News Junkie has reported large built in budget deficits for 2020 and 2021.

Federal Update: a Very Busy December

Congress is back in session in Washington, and they have a very busy agenda. Here is a list of the main issues they plan to address before the Christmas break:

  • Avoiding a government shutdown: the federal government has only enough funds to continue operating until December 8, so Congress must pass a continuing resolution to prevent a shutdown. The bill requires 60 votes in the Senate, so some bipartisan cooperation is necessary. Unfortunately, negotiations fell apart before they could even start.
  • CHIP reauthorization: funding expired two months ago, and Congress has not yet been able to reauthorize the funding. CHIP might be included in efforts to pass a continuing resolution. If no reauthorization passes soon, Connecticut’s CHIP program will likely run out of funding in January and be forced to leave over 17,000 children without insurance. Read more about CHIP here.
  • Tax reform proposal: House and Senate leadership are trying to pass a big tax cut package in the coming weeks. We have written about this bill extensively (here, here, and here). It is an extraordinarily upside-down proposal that pushes large permanent tax cuts for corporations and the very wealthy, eliminates many tax credits and deductions that help working families, and leaves 13 million people without health insurance. Senate leaders intend to vote on the proposal before the end of the week; the House passed their version of the bill two weeks ago.
  • The tax reform proposal also includes a repeal of the individual mandate - a key part of the ACA. This is projected to cause premium increases in addition to leaving many Americans unable to afford health insurance.

ICYMI: Recent Publications from CT Voices

Session in Review
It has been a long, contentious legislative session, dominated by endless budget fights. It was not, however, a meaningless one. We had many policy victories this year in budget transparency, early care and education, juvenile justice, and health care.
Click here to read our review of the 2017 legislative session.

The State of Early Childhood
For more than a decade, Connecticut has made expanding early care and education programs a policy and budget priority. In our latest report, we provide an in-depth look at early childhood programs in our state and the road ahead.
Click here to read our "State of Early Childhood" report.

The Children's Budget
More than a hundred days after the new fiscal year began, legislators finally found sufficient common ground to pass a budget. The Children’s Budget, the share of state spending in children and families, reached a record low in the latest state budget, declining to 27.8 percent of the budget, down from 29.5 percent in fiscal year 2017.
Read More about how the budget agreement will impact children and families in our latest budget analysis.

What We Are Reading

Issue Areas:
Budget and Tax, Child Welfare, Early Care, Education, Family Economic Security, Health, Juvenile Justice