‘Guardrails’ have big gaps and so don’t achieve much

By Chris Powell

There’s a big gap in Connecticut’s “fiscal guardrails,” the rules enacted in 2017 to require state government to save a big part of any budget surplus and apply it to its unfunded pension obligations. The gap was noted the other day in an essay in the Hartford Courant by the executive director of the Connecticut Conference of Municipalities, Joe Delong.

While the “guardrails” have slowed the increase in state spending, the governor and General Assembly lately have been producing budgets that favor state government’s own agencies and programs at the expense of the appropriations state government makes for municipal schools. That is, since the “guardrails” were enacted, state government has economized disproportionately with its share of the cost of municipal education. 

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In turn, to keep school spending up, municipalities have raised their property taxes, most of whose revenue goes for schools.

Delong writes: “The national average states spend to support public education is 44%.  In Connecticut, since the enactment of the ‘guardrails,’ the state has dipped into the lower quartile at a 36% state share. This is not a sound fiscal spending control. It is a calculated spending shift out of the state budget and into the regressive and already overused property tax.” The burden of that tax falls most heavily on low- and middle-income households.  

This tax shift is not a direct result of the “guardrails” themselves but rather a result of the choice made by the governor and legislature. They can claim political credit for keeping state spending under control and avoiding state tax increases while local officials raise municipal spending and property taxes and risk the blame.

To some extent the governor and legislators may figure that they can let school aid to wealthier towns be eroded by inflation because those towns can afford higher property taxes and education aid should go mainly to poorer towns. 

But then as measured by student performance, public education in Connecticut has been declining for years without regard to spending. There may be some fairness to taxpayers in shifting school aid from wealthier towns to poorer ones, but Connecticut often has rewritten its school aid formulas since the state Supreme Court decision in Horton v. Meskill in 1977 without making any substantial difference in education. For while elected officials don’t want to acknowledge it, educational success is almost entirely a matter of parenting. Without good parenting of their students, schools can’t do much, regardless of how much they spend. 

Municipal spending and property tax increases could be avoided without increasing state aid if state government enacted controls on municipal spending, particularly by eliminating binding arbitration of municipal employee union contracts or allowing municipalities to elect their contract arbiters. But that would remove the power the teacher unions have over municipal treasuries, and the unions are far more influential than mere taxpayers.

There’s another big gap in the “fiscal guardrails,” one identified by political columnist Red Jahncke. He notes that the extra billions of dollars that the “guardrails” have been applying to state government’s vast unfunded state employee and teacher pension obligations aren’t reducing those obligations much at all. That’s because those obligations simultaneously are being increased by the big raises paid every year to state employees.

The pension obligations are based on salaries, so the cost of raises keeps increasing through the pensions. The unfunded pension obligations can’t be substantially reduced without much more restraint with payroll, as with a long freeze on salaries.

“Connecticut residents,” Delong notes, “deserve an open and honest debate over how we can experience the benefits of fiscal restraint without the continued hidden regressive tax increases that are buried within.”

Even more than that, Connecticut needs a debate about what it’s really getting for its taxes — effective public services or an amply compensated political army protecting an unchangeable and unaccountable regime. Greater progressivity in taxation does little good when the cost of government goes up anyway without a matching increase in public services; it just makes elected officials feel better about their ineffectiveness.

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Chris Powell has written about Connecticut government and politics for many years. (CPowell@Cox.net)

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