Report: State Spending on Children Dropped Over Last 20 Years, But Surplus Funds Won’t Fill Hole
The amount of money Connecticut spends on programs and services that benefit children dropped about $1.8 billion over the past two decades, according to a Connecticut Voices for Children report.
Going back to 1992, spending on education and children’s health and human services accounted for about 40 percent of the budget. Today, it’s just 30 percent, Wade Gibson, a senior policy fellow, told a group of health and human service advocates on Friday.
Gov. Dannel P. Malloy’s Budget Director Ben Barnes stood in the back of the room listening to Gibson’s presentation.
“I’m not sure I’m going to be able to rise to the challenge that was issued just a moment ago,” Barnes admitted as he stepped to the podium.
He said he supports their efforts and believes investment in children and their education is important, however, if the state were to go back and budget the way it did 20 years ago, then the state would be in bad shape. He said that 20 years ago the state was entering into binding contractual pension agreements with its employees but then failing to fund those pensions at the levels required to keep them solvent.
As of today, the state is spending about $1.5 billion a year on its pension obligations to make up for lost time and the decisions of previous administrations.
“We are also faced with having to deal with large debt left by our predecessors,” Barnes said. “Pension debt for our teachers, and state employees.”
He said the state’s revenues have improved and the administration wants to use the $505 million surplus to bolster the Rainy Day Fund, make an additional $100 million payment to the pension fund, and give $55 checks to 2.7 million residents, including those who qualified for the Earned Income Tax Credit. The refund program will cost that state about $155 million.
Judith Meyers, executive director of the Children Health and Development Institute, asked Barnes why they made the decision to create a refund program.
Barnes explained that some of the increase in revenue the state is realizing at the moment came from a one-time tax amnesty program, which brought in about $150 million more than anticipated. He said since that revenue is one-time revenue the administration didn’t want to spend it on recurring programs and services.
“To make a tax deduction of that size recurring would be foolish,” Barnes said.
He said the decision to phase back the sales tax exemption for clothing and footwear under $50 was a relatively expensive proposition and will cost the state about $140 million a year.
He anticipates there may be some other small changes to the state’s overall tax structure when Malloy unveils his budget next week, but nothing dramatic.
“I’m not going to tell you we always got it right, but we certainly have struggled to try and find that balance,” Barnes said.
Barnes described the $55 refund check a “meaningful amount” and explained that it will benefit low-income residents who receive the Earned Income Tax Credit.
He said he would love to spend more money on children’s issues, but it would cause the state to dig itself into a hole.
Barnes bristled at the notion the administration hasn’t done enough for children. He said the governor increased education spending $300 million during his first year in office to replace the money for schools that the state was no longer receiving from the federal government under the federal recovery act. Barnes said the amount of education spending has increased about $40 million a year since that time.
“We haven’t gone to the 30-years-ago levels of spending, but we’ve made significant enhancements to what we’ve spent on children. I think they’ve been a priority to the governor,” Barnes said.
He added that he thinks the two-year budget adopted last year put the state on solid footing and gives the state a chance to dig itself out of the hole it found itself in.
“You don’t solve your debt problems, and your long-term problems overnight,” Barnes said. “You set yourself on a course to dig yourself out over time. I think we’ve set ourselves on that course.”