Survey Is A Warning To State National Group Calls Connecticut's
Fiscal Health Precarious
December 17, 2004
By DAVID LIGHTMAN And CHRISTOPHER KEATING, Courant Staff Writers
WASHINGTON -- While the economy is
boosting most states' fiscal pictures, Connecticut's budget health
is precarious, a national survey of the states reported Thursday.
The 2004 Fiscal Survey of the States
found that Connecticut's year-end budget balance is well below what's
considered adequate to withstand an economic downturn or runaway
"States like Connecticut have
real issues to deal with," said Scott Pattison, executive director
of the National Association of State Budget Officers. His group
and others, which represent state interests in Washington, issued
In recent years, Connecticut has had
major budget shortfalls, prompting the state legislature to raise
virtually every major tax to close the gap. Those increases have
included hikes in the personal income, corporate and cigarette taxes
under then-Gov. John G. Rowland.
Due partly to those tax increases and
an improving economy, officials are now projecting a surplus in
the current 2005 fiscal year of about $250 million, according to
the legislature's nonpartisan fiscal office. But Republican Gov.
M. Jodi Rell, citing one-shot revenues that were used to plug this
year's gap and projected 15 percent increases in health care spending,
says the budget deficit for the fiscal year that starts in July
2005 could be as high as $1.3 billion.
Perhaps the most vexing problem in
Connecticut and elsewhere, said Pattison, was Medicaid.
For the first time, the survey found,
state spending nationwide on the health program for the poor and
disabled will top elementary and secondary education. Some 21.9
percent of all state spending across the country will go for Medicaid,
the survey estimated, compared to 21.5 percent for education.
State spending on schools nationwide
has consistently been in the 20 to 25 percent range, but Medicaid
expenses have climbed from about 10 percent in 1987.
The Medicaid growth has created pressure
on state budgets like Connecticut's. Traditionally, a state is seen
as healthy if it has a year-end balance of about 5 percent of its
Twenty-three states will fall into
that category this year.
Then come the bottom 16 states, including
Connecticut. Its 2004 balance as a percentage of expenditures is
estimated to be 1.6 percent in Fiscal 2004 and 2.2 percent in Fiscal
That's scary, said Pattison. "Balances
tend to be a barometer and a red flag on future fiscal issues,"
But state budget director Marc S. Ryan
said Connecticut's fiscal health would have looked better had the
numbers been calculated a different way. The state, for example,
officially ended the 2004 fiscal year with a surplus of $300 million,
but an additional $225 million in surplus was thrown into the next
year in order to balance the next budget. As a result, the additional
$225 million was not counted in the national survey.
"They don't take into account
the gross surplus," Ryan said Thursday. "They look at
the net surplus."
Regarding Medicaid, Connecticut has
traditionally offered a better package of benefits than the national
average. The state, for example, offers dental care for adult Medicaid
recipients, which is not required by the federal government. Overall,
$2.9 billion of Connecticut's $14.3 billion budget for the current
fiscal year is spent on Medicaid.
What's needed, said Raymond C. Scheppach,
National Governors Association executive director, is strong federal
action, perhaps tax credits for long-term care or ending "dual
eligibility" of patients for Medicare and Medicaid.
But "with the federal deficit,
there will probably be no [big] help right now," he said.
So while the fiscal report found states
in better shape than in recent years, Pattison advised watching
what's happening to those still trying to work their way up to the
5 percent year-end balance.
What has happened to states this year,
he said, is akin to the person who gets his first raise in three
years, "and then the boss comes in and says your health care
is going way up."
Reprinted with permission of the Hartford Courant.
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