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Why I Voted for Deficit Reduction Plan
By State Rep. Richard F. Ferrari
My vote to approve the deficit reduction plan passed by the state House of Representatives and the state Senate at the end of February was one of the most difficult ones that I have cast since I was first elected to the General Assembly in 1990.
The bipartisan plan I reluctantly supported on February 26 includes a mix of tax increases and budget reductions that very few legislators were comfortable with. Unfortunately, given the reality of a Democrat-controlled General Assembly, it was highly unlikely that a deficit reduction plan consisting entirely of spending reductions could have passed.
The measure, which is intended to close this year's $650 million deficit, will ensure that the state will not have to borrow to cover the revenue shortfall, which would have resulted in our bond rating being downgraded by Wall Street rating agencies, who regard bonding to pay for operating expenses as the height of fiscal irresponsibility. If our rating were downgraded, the state would have had to pay higher interest rates on bond issues, which in turn would have limited our ability to sell our bonds to finance worthwhile local projects.
Had we been forced to borrow $650 million, the money would have to have been paid back over five years at high rates of interest, compounding the state's problems meeting its obligations and its ability to balance future budgets. Interest payments alone would have amounted to about $156 million over a six-year period.
It was very important for us to deal with the projected deficit for the current fiscal year that ends June 30 before taking up the biennial budget for fiscal years 2003-04 and 2004-05. Had we not passed this deficit reduction package, the shortfall could have ballooned to as much as $2 billion by the end of the next fiscal year.
The measure we approved reduces state spending by $270 million and increases revenues by $308 million for the current fiscal year. The remainder of the revenue gap will be closed by state employee union contract concessions and other transfers and adjustments.
While the deficit mitigation plan the General Assembly approved does not reduce spending by as much as I would have preferred relative to tax increases and union concessions, it is an improvement over the bill the governor vetoed a week before, which would have meant an additional $61 million in tax increases. That bill, which was drafted by the majority Democrats with no input from the governor or from Republican legislators, would have raided the Soldiers, Sailors and Marines fund to the tune of $8.9 million per year for three years and would have significantly reduced the amount of aid available to benefit needy Connecticut veterans. No Republican legislator voted for the measure, which was vetoed by Governor Rowland.
The measure we approved on February 26 also allows more money to be deposited in the state's "Rainy Day Fund" than is currently the case. When budget surpluses occur in the future, funds amounting to 10% of the state's budget (instead of the current 7.5%) would be placed in the Rainy Day Fund and be available for use when fiscal emergencies arise.
While the deficit reduction package we approved is far from a perfect solution, it at least is a bipartisan one that spreads the pain around relatively equally—rather than discriminating against only a few groups of people. It allows us to end this fiscal year without a deficit and without having to borrow to meet operating expenses—and it gives us the time we need to craft a new two-year budget that will preserve the programs that are most essential to the people of Connecticut without resorting to another round of major tax increases. It is a measure that will get us through what remains of the economic downturn that has plagued our state for almost two years without saddling our children and our grandchildren with billions more in state debt.
Under the circumstances, it was the best we could have done and that is why I supported it.
Mr. Ferrari represents the 62nd District, which includes Barkhamsted, East Granby, Granby and New Hartford.
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