Constitutional Budget Amendment Forum Recap

Feb 16, 2016

Last week, the MetroHartford Alliance hosted a forum on constitutional budget amendments at the UConn School of Law. The event featured a panel discussion with George Jepsen, Connecticut Attorney General; Richard Balducci, Former Speaker of the House of Representatives; Wesley Horton, a partner with Horton, Shields & Knox; Keith Phaneuf, budget reporter for the Connecticut Mirror; and Spencer Cain, former director of the Connecticut General Assembly’s Office of Fiscal Analysis (OFA) .

The discussion, moderated by Alliance CEO Oz Griebel, started by examining the State’s constitutional spending cap which accompanied the implementation of Connecticut’s income tax in 1991. As was described by Former Speaker Balducci and Attorney General Jepsen, the spending cap was created as a compromise in order to gain votes to pass the adoption of the income tax. The idea was to counter the notion that an income tax would allow state spending to grow at exorbitant rates, as a spending cap would obligate the state to grow spending no faster than inflationary growth in personal income.

Mr. Phaneuf had just started his reporting career the year the spending cap was created, and explained to the audience how the spending cap has been viewed and used over the last twenty years, as well as how it has changed. The cap was originally viewed as the spending growth guideline it was designed to be, but during years with a budget surplus, the legislature would vote to override the cap in order to use the money for programs. When surpluses turned to deficits however, the cap was soon viewed as a hindrance to the new spending practices and appropriation reallocations would be used to avoid topping the cap. Some of these practices have contributed to the state’s current fiscal situation, where FY 2016 carries a projected deficit of $500 million, and a $1.7 billion deficit in FY 2017.

Attorney Horton raised the issue that the spending cap was fundamentally flawed because it was not clearly defined and thus allowed the legislature to find ways to artificially avoid its intended goals without consequence. For example, because certain types of expenditures are exempt from the spending cap (education, municipal aid, etc.), if a budget was in danger of spending too much money, the legislature would appropriate line items as an exempt expenditure.

Mr. Cain built on this issue by sharing his experience with OFA after the implementation of the spending cap. Since the spending terms of the cap were not defined, there was no set formula for determining exactly which budget expenditures were permissible. Each year, OFA and the executive branch’s Office of Policy and Management would have to meet to make sure they were using the same formula to calculate the cap’s rate of growth.  

While this overall interpretation of the cap’s function was followed for more than two decades, an opinion issued in November 2015 by Attorney General George Jepsen deemed the spending cap unenforceable due to the fact that the legislature has not adopted definitions, despite being required by statute to do so.

Because the constitutional spending cap also lacked original jurisdiction, Connecticut’s courts have not weighed in, calling the issue a “political question,” and one that can only be addressed by the legislature. Their decision is based on the fact that the law does not clearly give them a mandate to intervene on the matter; this concept is known as original jurisdiction.

The panelists also talked about the implications this experience with the spending cap has for the transportation lockbox, a new constitutional amendment that Governor Malloy has proposed. The lockbox is intended to secure revenues for transportation and to also ensure that these dollars be used solely for transportation purposes.

One main takeaway from the conversation is that in order to make the spending cap what it was intended to be, definitions must be clearly defined in the applicable constitutional and statutory amendments, something reiterated by Attorney Horton. The lessons learned from the spending cap should be applied to the lockbox amendment in order to prevent its intended function from being thwarted. 

Nearly every panelist spoke to the enormity of the challenges facing the legislature in the coming years with budget deficits set to top $1 billion. Without the luxury of implementing a new kind of tax – like the income tax, it was noted – the only way to resolve it is through painful and potentially unpopular changes. Like the forum’s panelists shared, new revenue streams, as well as numerous budget gimmicks, have all been exhausted.


Thank you Phil Shattuck for writing this blog for us! Phil is pursuing his BA in Urban Studies at University of Connecticut and will be interning at the MetroHartford Alliance for the semester. 

1 Comment

  1. 1 wwdwd 27 Jun
    good artical !

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