Connecticut Is BROKE, and we must act TODAY to FIX OUR FUTURE.
(introduction) Connecticut is broke. Not going broke, but BROKE. We face almost a $10 billion budget deficit over the next three fiscal years, as well as liability of $34 billion in unfunded post-retirement benefits promised to state retirees.
Connecticut is ranked 48th nationally in our “debt weight” and our bond rating has been downgraded because we borrow to pay operating expenses. State spending has increased by 227 percent since 1980 – that’s from $4,400 per household to $10,000 per household.
(thesis) There are action steps we must take today to fix our future. We must convert to full-accrual Generally Accepted Accounting Principles (GAAP), create a long-term strategic plan for the State of Connecticut, and proactively designate any unanticipated surplus revenue to further reduce budget deficits and unfunded post-retirement benefit liabilities.
(transition) Connecticut’s fiscal status is not portrayed realistically.
Connecticut must implement full-accrual GAAP Budgeting
-Connecticut currently budgets using the modified cash basis. This enables the state to incur expenses in one fiscal year and pay them in the next, thus providing the illusion of a balanced budget.
-GAAP recognizes an expense when the liability is incurred, and revenues when they are earned.
-GAAP provides a high level of transparency in the fiscal management of an entity.
(transition) But even if we implement GAAP, “If you don’t know where you’re going, any road will take you there.”
Connecticut must create and implement a long-term, “living document” strategic plan.
-Connecticut must set and adhere to measurable goals for financial performance and program implementation.
-State and local government must determine where expenses can be shared through initiatives such as regionalization to eliminate redundancies and reduce costs.
-Connecticut most also devise and employ a mechanism to measure the efficacy of its strategic plan, and revise the plan as necessary.
(transition) Once a plan is in place, we must be vigilant in our attack upon our deficit and unfunded liabilities.
Connecticut must proactively designate any unanticipated surplus revenue to further reduce budget deficits and unfunded post-retirement benefit liabilities.
-There will be no single “magic bullet” to resolve Connecticut’s fiscal crisis.
-Positive revenue changes will likely be incremental.
-Unanticipated surplus revenue must be strictly designated for application to either any existing annual budget shortfall, or the unfunded post-employment benefits promised to state employees.
(transition) We face a problem so big that we think it belongs “to somebody else.” This problem will not go away by ignoring it. State legislators, local governments, and the citizens must acknowledge the problem and work together to Fix Our Future.
(conclusion) Realistic steps must be taken today:
Connecticut must convert to GAAP.
Connecticut must create and implement a strategic plan.
Connecticut must proactively designate any unanticipated revenue for its budget deficits and unfunded post-retirement benefits liabilities.
We must act today to Fix Our Future. Because if we don’t, slowly but surely residents will leave Connecticut for states with more favorable conditions.