The New Connecticut State Budget

Connecticut State Budget

The State of Connecticut

Back in May, the state government of Connecticut approved a new budget with the goal of fixing a deficit of approximately $960 million. The budget – which was proposed by the Democrats – did not raise taxes but instead addressed the deficit through various spending cuts and layoffs. General fund spending was cut by $821 million, hospital funding was cut by $43 million and state grants to non-profit industries which provide addiction and mental health services were cut by roughly $8.7 million.

The budget took effect on July 1. Opponents stress the cuts to the medical and non-profit industries and highlight the impact of such cuts on Connecticut families. Supporters emphasize the absence of tax increases and point to the fact that difficult decisions were inevitable in order to balance the budget. Though certain negative effects will undoubtedly ensue, the Democratically-sponsored budget was in fact the lone option as the Republicans failed to put forth an alternative proposition.

When the budget passed, Connecticut governor Dannel P. Malloy foresaw as many as 2,500 state jobs being eliminated. Some of these eliminations would result from retirements and other forms of voluntary resignation. The layoffs were projected to occur across a broad range of employment sectors including education, law, medicine and others as well. The layoffs have sparked protests and heated opposition from union leaders. Lori Pelletier, president of the Connecticut AFL-CIO, went so far as to say the following: “A vote for this budget is a vote for laying off rape crisis counselors, corrections officers, nurses, mental health workers, and teachers.”

Though it is certainly not without its unattractive elements, the new state budget of Connecticut appears to be on path with projections and should lead to a balanced fiscal situation in 2017. Connecticut state revenue derives from various sources, several of which are rather volatile, and so only time will reveal whether these projections turn out to be correct. When budgets are greatly off-kilter – as was clearly the case with Connecticut’s budget prior to the passing of this new plan – easy solutions are often impossible to come by. Hopefully economic growth can help relay former state employees into well paying new jobs.

Image credit: davecito

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Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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