Keeping Kids In the Budget Part 2: Long-Term Budget Challenges Put Kids at Risk

Back • February 3, 2015 • Uncategorized

At Connecticut Voices for Children, we believe that children should be the number one priority in the budget. Unfortunately, as we discussed in our previous post in this series, there are mechanisms built into the budgeting process that put programs for children and families at particular risk when funds are scarce. Today, we’ll take a look at Connecticut’s long-term budget challenges, and how they put children at risk.

Over the next two fiscal years (the period beginning July 1, 2015 and ending June 30, 2017), Connecticut is currently projected to run deficits of around $1 billion each year.  That is,  the revenue that the State expects to take in from taxes, fees, payments from the federal government, and borrowing each year is about $1 billion less than what it plans to spend. To put this in perspective, the State spends around $20 billion per year. These deficits mean that, during this current legislative session, the Legislature and the Governor must figure out how to either raise another $1 billion in revenues each year (through taxes, fees, or borrowing money), cut $1 billion from projected spending each year, or some combination of the two.

For many of the same reasons that human services programs just faced rescissions (emergency budget cuts), they will likely also be targeted for cuts during this current legislative session to close the impending deficit. The State cannot cut salaries or benefits without renegotiating state employee contracts, and can't miss payments on debt service. The State could cut grants to towns, but this generally hurts education; it also creates only the illusion of savings, because towns usually must raise property taxes (which weigh most heavily on the poor) to make up for what they lose from the State. The State also could cut Medicaid (and we are concerned that they will try to do so) but this is not an efficient way of saving money, because we miss out on Federal reimbursement. Finally, the State could raise taxes or fees, but this is often politically challenging.

Importantly, these budget challenges are not new and may not be going away. Throughout the 1990s and 2000s, Connecticut saved very little to pay for promised healthcare and pensions for State employees who will retire in the 2010s and 2020s. We also lost quite a bit of what we did save during the recession. As a result, nearly every dollar the State can free up is reallocated to try to pay down past debts. Without new revenue, this crowds out other spending.

At Connecticut Voices for Children, we track this trend through a project called "The Children's Budget," which measures the share of all State spending that is spent on programs devoted to children and families. (In brief, this includes the Department of Children and Families, the Department of Education, UConn and the State University system, HUSKY health insurance for children and families, and a few other programs.) As shown below, spending on children has declined from about 40% percent of the budget to 30%, while debt service and fringe benefits have gone from 16% to more than 25%.

 

 

 

In short, Connecticut’s spending priorities have shifted away from children, families, and investments in the future, and toward paying down obligations that we accrued in the past.

Tomorrow, we’ll wrap things up by talking briefly about why it is so important Connecticut maintain its investments in children, and how you can get involved supporting State investments in children.

We envision a Connecticut that creates opportunity for everyone, not just the lucky and privileged few. Together, we can ensure a prosperous future for all of our children.

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