Gov. M. Jodi Rell has backed away from an unpopular plan to sell some future revenues at a discount to cover a $1.3 billion budget shortfall in the next fiscal year. Her change of heart is wise. It's bad policy to use tomorrow's income to pay today's bills.
But her new solution to the state's budget deficit is also troubling. It doesn't reduce state spending. It just refinances.
In a complicated maneuver, she would move $1 billion (in rainy day funds) from the current fiscal budget to the next one, which begins July 1. She would then borrow to fix the deficit she created in the current budget. She would pay off the loan over seven years by raiding portions of energy conservation funds and a tax on electricity customers.
Why all the contortions? Why not just borrow to cover the deficit in fiscal 2010-11? Because the state can't borrow for a budget year that hasn't started yet.
The governor is playing a big shell game. She is leaving to the next governor the painful spending cuts and tax increases that this budget plan avoids. Even with this plug, the state is looking at a $3 billion-plus deficit projected for fiscal 2011-12.
In addition, the plan could affect thousands of "green" jobs that depend on energy conservation funds.
Her plan also depends on a change in management at Bradley International Airport that she hopes will bring in some $25 million yearly. The airport would be run not by the state Department of Transportation, but by a quasi-public authority. That could free it from state personnel and contracting rules and allow more marketing and retail.
We have advocated such a switch, though we wonder whether the economic return will come quickly. Regardless, it's disappointing that once again, the state may borrow and pray its way out of its financial problems, instead of cutting spending.
This is only postponing the painful choices that will fall upon the next governor and legislature.
Reprinted with permission of the Hartford Courant.
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