March 12, 2018

Fixing Connecticut’s Budget Woes? Tread Carefully When Implementing New Fiscal Controls

Kim S. Reuben, director of the State and Local Finance Initiative at the Urban-Brookings Tax Policy Center, recently published an in-depth analysis of the risks and potential pitfalls that Connecticut´s new fiscal restrictions, and especially the Bond Lock, have for the state. 

Late last October, Governor Dan Malloy approved a two-year $40.2 billion budget for Connecticut more than 100 days after the fiscal year began. A strongly bipartisan effort, the package included spending cuts, new taxes and fees, and new fiscal controls meant to stabilize and improve the state’s financial future.

Many of these new controls are commendable, but if Connecticut implements strict budget rules without exceptions for recessions and other unanticipated events they could create a new form of state fiscal risk (...)

Based on our research, addressing tax volatility and enacting rules to encourage saving during boom periods are good steps for budget stability. However, locking in strict budget rules without allowing for exceptions under difficult economic conditions, may be short-sighted. And enforcing these rules through bond documents could be especially risky. 

You can read the full piece on TaxVox, the Tax Policy Center’s blog. As you know, here at Connecticut Voices we have made repealing or delaying the Bond Lock our main policy priority for the year. We will be hosting an event about the Bond Lock on March 14th - don´t forget to register!

Issue Area:
Budget and Tax
bond lock, budget, restrictions, Tax Policy