Connecticut State Budget Process
The budget process starts with budget formulation. Agencies start in May by preparing their budget requests. They must provide a current services budget plan and lists of options if changes in spending or revenues are requested. These changes show the differences between the level of current services and whether resources will be reallocated. Agencies must account for inflation, caseload increases, and other increases. Forms from the Budget and Financial Management Division of the Office of the Policy and Management (OPM) are sent to state agencies eleven months before the budget will go into effect. The deadline for current services biennial budget requests is September 1st and program options are due by October 1st. In odd-numbered years, adjustments and revisions are submitted by these deadlines, if necessary (State Budget Process, 2004).
The Budget and Financial Management division reviews requests and prepares recommendations for agencies under their jurisdiction. These recommendations, done in September and October, are based on the effectiveness of current programs and the public’s perceived need for new and expanded programs. The Secretary of OPM reviews all recommendations and makes adjustments according to State revenue estimates and the priority of public needs (State Budget Process, 2004).
If there is a newly elected Governor, the Secretary of the OPM must send recommendations to the Governor by November 15th for review. The Governor-elect can initiate budget hearings or grant requests to hearings by an agency. During the months of December and January, final decisions are incorporated into the budget (State Budget Process, 2004).
The General Assembly receives the Governor’s budget on the first session day following February 3 in odd-numbered years. Incumbent governor’s can wait to submit their budget until the first session day after February 14th in odd-numbered years. The package must have a separate budget for each of the two years and an estimate report on revenues and expenditures for the three years after the biennium. The Governor submits a report on the status of the budget, recommendations for revisions and adjustments, and estimated revenues and expenditures for the next three years on the Wednesday after the first Monday in February. This report is required for all even-numbered years (State Budget Process, 2004).
The Governor’s budget document must contain a budget message, recommendations for appropriations for every agency in each year of the biennium, drafts of the appropriations, necessary bonding and revenue bills to carry out the recommendations, and recommendations about the economy and its effect on the state budget (State Budget Process, 2004).
The Appropriations and Finance Committees review the Governor’s recommendations. The Appropriations Committee holds public hearings on each agency’s budget while the Appropriations Subcommittees review agency budgets with Budget and Financial Management Division staff, the OFA legislative staff, and agency heads. The twelve Appropriations Subcommittees are Collective Bargaining, Conservation and Development, Elementary and Secondary Education, General Government A, General Government B, Health and Hospitals, Higher Education, Human Services, Judicial and Corrections, Legislative, Regulation and Protection, and Transportation (State Budget Process, 2004).
The Finance Committee and its Subcommittees review revenue and capital project portions of the budget. The two Finance Subcommittees are Bonding and Special Revenue. The subcommittees with the help of OFA staff, present recommendations to the Committee’s chairpersons. These recommendations are reviewed with leadership. Committees draft and report final bills for floor action between February and April. A committee budget report containing legislative intent for all the changes made by the Appropriations Committee to agency budgets are prepared by OFA (State Budget Process, 2004).
In odd-numbered years, the legislature appropriates funds to the agencies for the biennium which begins the following July 1, in one bill. In even-numbered years, expenditure adjustments for the upcoming year must be reported in at least one bill. The level of appropriation cannot exceed the revenue estimates in the bill. A main bond bill can authorize money to state facilities. Two major bond bills exist. School construction, housing, and pollution grants are in one bill while the other provides money for transportation. Other bills can either authorize the expenditure of funds or provide revenue measures based on tax changes but they are not as significant as the Appropriations Act (State Budget Process, 2004).
An annual report is published by OFA on the budget that was passed by the legislature including new expenditures, expenditure reductions, changes in state taxes and other revenue measures, and bonding (State Budget Process, 2004).
To ensure that State funds are used for financially sound management, the Budget and Financial Management Division staff administers agency appropriations. Funds are allotted on a quarterly basis, which is submitted, to the agency and Governor for review and approval before July 1. The Governor can restrict appropriated funds if there is a change in circumstances or if estimated budget resources will not be able to finance the appropriations. If, according to the financial statement by the Comptroller, a projected deficit is greater than 1% of the total General Funds appropriations, the Governor can restrict allotments up to 5% of an individual appropriation within an agency but not more than 3% of appropriations in a fund. The Governor can make further reductions with the approval of the Finance Advisory Committee but any change creating a reduction of more than 5% of the appropriation from any fund would require General Assembly approval (State Budget Process, 2004).
The Budget and Financial Management Division can request adjustments in the quarterly allotment program or can request to transfer funds from one appropriations account to another. If such a transfer is more than 10% of the original appropriation or $50,000, or the lesser amount, it needs to be approved by the Finance Advisory Committee. This Committee is made up of the Governor, Lieutenant Governor, Treasurer, Comptroller, and two Senate members, with not more than one from the same political party, and three House members, with not more than two from the same political party, on the Appropriations Committee (State Budget Process, 2004).
The Bond Commission allocates bond authorizations. This joint executive-legislative body composed of the Governor, Treasurer, Comptroller, Attorney General, Secretary of OPM, Commissioner of the Department of Public Works, and Co-chairpersons and ranking members of the Finance, Revenue, and Bonding Committee. Because of the time required for capital construction and the workings of the allocation process, a bond authorization can take several years to actually be allocated (State Budget Process, 2004).
The Governor is able to appoint most commissioners and many department heads that help advocate his recommendations. Heads of boards and commissions that serve in terms and are not appointed by the Governor are more independent with the budget requests that they make. Compromise is important to the budget process when the legislative majority is of one party and the Governor is of another. The smaller the ratio between the parties, the more compromise will come as a result. Moderate and liberal caucuses within the majority party have played a major role in the budget process in the past several years (State Budget Process, 2004).
During an election year, the budget process is even more difficult because legislators must make a decision between reducing taxes and thus reduce the burden on taxpayers or meet the demand for more services and grants to local governments and of special interest groups (State Budget Process, 2004).
Traditionally, the Governor has had the most power in the budget process because he presented it to the Legislature. Lately, the legislature has asserted itself more and the Appropriations and Finance Committees do more investigation into the Governor’s recommendations. This comes because of the addition of legislative budget staff in the early 1970’s, which enabled the Legislative Branch to increase its role and obtain equal footing with the Executive Branch (State Budget Process, 2004).
The legislature is aided by several recent changes. All bills reported from committees, all amendments offered on the floor of the House and Senate, and all regulations must have fiscal notes. Four legislators were added to the Bond Commission, which used to have only six members from the Executive Branch. Copies of agency budget requests, federal grant applications, and notices of awards are sent to them. The Comptroller must release monthly reports about the financial status of the state to the legislature and to the public. The Governor must report in October, January, and April on whether a deficit is projected. Agency heads are required to submit to the OFA monthly financial status reports and personnel status reports. Tax information must be available to the legislature (State Budget Process, 2004).
A spending cap was developed on general budget expenditures. There are two factors that determine how much of an increase is allowed between one budget year to the next budget year. The budget cannot be increased by more than the average increase in personal income in the state over the past five years or by the percentage increase in inflation in the past year. The U.S. Bureau of Economic Analysis provides information on personal income increases while the U.S. Bureau of Labor Statistics provides information on inflationary increases. Expenditures from the Budget Reserve Fund, implementation of court orders or federal mandates, debt service, and grants to distressed municipalities are excluded from the cap. The legislature can exceed this cap if the Governor declares an emergency or extraordinary circumstances and there is a 3/5 vote by the General Assembly (State Budget Process, 2004).
The Governor’s Proposed 2005 Budget total is $14.235 billion while the Appropriations Committee’s 2005 Budget Proposal total is $14.309 billion. Democrats believe that Connecticut’s economy will best grow by expanding loan programs to women and minorities, create programs assisting small businesses, re-start the Small Town Economic Assistance Program, restructure the Urban Reinvestment Tax Credit, and move forward on the Transportation Strategy Board’s proposals on congestion mitigation. They also believe that co-pays and premiums for the Medicaid and HUSKY programs should be eliminated and adults should be restored to the HUSKY program. They believe that the School Readiness Program should be expanded to prevent retention and that the Department of Agriculture should be reinstated and be fully funded and that many measures be passed to protect consumers. They believe that the prison-overcrowding crisis needs to be addressed. They also argue that the ConnPACE program should be restructured and that the debate on medical malpractice be resolved (House Democrats, 2004). They believe that government should be more accountable to its people (Senate Democrats, 2004).
The Republicans, on the other hand, believe there should be no new tax increases and that most programs that were cut in the last budget session not be restored. They are being fiscally conservative as a result of the state budget crisis. They do believe in funding for rural and suburban community schools, making Connecticut’s motor vehicle licenses expire when an immigrant’s legal stay in the U.S. is over, and reforming taxes to loosen the effects of binding arbitration on the local budgeting process (Senate Republicans, 2004). They believe that 60% of both houses should be required to pass tax increases, that public hearings be held on all tax increases, and that the state should stay within its spending cap (House Republicans, 2004).
Highway congestion is considered a major issue for 2004 by the OLR but the legislature has failed to appropriately provide adequate funding for mass transportation (Lothman, 2004). In the next paper, I will be advocating an increase in the gasoline tax to provide better mass transportation for the state of Connecticut.
