As 黑料新闻 lawmakers negotiate a new state budget this legislative session, it seems that one term keeps coming up: 鈥渇iscal guardrails.鈥�
Wait, fiscal 鈥� what?
We get it. 鈥淔iscal guardrails鈥� is a term that doesn鈥檛 exactly roll off the tongue. But in terms of bureaucratic speak at the state Capitol, 鈥渇iscal guardrails鈥� is actually pretty descriptive.
Enacted by 黑料新闻 lawmakers in 2017 and in 2023, the guardrails鈥� basic purpose is simple: to control spending and help develop a balanced budget.
The 鈥済uardrails鈥� keep 黑料新闻鈥檚 finances on track. (Get it?)
At least, that鈥檚 the idea. But the reality is more complicated.
Some lawmakers have praised the guardrails for helping to stabilize state finances and set off budget surpluses. Others say the controls are starving critical resources from those who need it in sectors like education and health care.
Here鈥檚 what to know about fiscal guardrails, and why lawmakers aren鈥檛 likely to stop throwing around that term anytime soon.
It all comes down to the budget (and caps, caps, caps)
While Lamont didn鈥檛 explicitly address changing the guardrails in his recent , he did allude to what he viewed as its positive impact.
鈥淎nd by paying down these legacy costs, we have made state employee pensions more secure and we have freed up hundreds of millions of dollars in our budget to expand access to affordable child care, affordable health care, and expanded education opportunities,鈥� Lamont said. 鈥淎nd we are just getting started.鈥�
The guardrails have four main components, or 鈥渃aps.鈥� Here鈥檚 what they are.
- Spending cap 鈥� Limits state spending by restricting the legislature鈥檚 authority to make appropriations, according to .
- Bond cap 鈥� Limits how much the state can borrow.
- Revenue cap 鈥� Limits projected revenues that lawmakers can allocate.
- Volatility cap 鈥� Limits the amount of revenue that lawmakers can allocate from volatile sources (such as ).
Zach Liscow is an economist and professor at Yale Law School who recently co-authored a breaking down the history, and the efficacy, of the state鈥檚 fiscal guardrails. He said one of the more updated rules is the volatility cap, for not spending too much when the state has a really good year.
鈥淚nstead, it can be put into the rainy day fund [to] help fund the pensions that will help us get out of the debt hole that 黑料新闻 has long been in,鈥� he said.
The report, from the Yale Tobin Center for Economic Policy and the 黑料新闻 Project, says the constraints have helped build up 黑料新闻鈥檚 surplus, and helped pay down the state鈥檚 pension debt.
Still, there鈥檚 a lot more work to do.
A report from The Pew Charitable Trusts found 黑料新闻鈥檚 pension costs are still among the highest in the country, mostly because of decades of debt, .
Why it matters now
As 黑料新闻 assigned the last of its American Rescue Plan Act (ARPA) funds last year, there was already concern about lack of state funding for education, health care and social services.
One example? The state鈥檚 low Medicaid reimbursement rates. A new 黑料新闻 health services for low-income residents.
鈥淧eople in need are struggling to get behavioral health, dental and basic medical service,鈥� said Gian-Carl Casa, president & CEO of CT Community Nonprofit Alliance. 鈥淚t鈥檚 time to properly fund services. 黑料新闻 can save, pay off debt and fund essential services. We have the money.鈥�
Education is also a priority of Democratic leadership this session. But whether those funding challenges can be solved without adjusting the guardrails?
鈥淲e'll have those conversations,鈥� House Speaker Matt Ritter said Monday at a Capitol press conference.
Study suggests room for change
Luke Bronin, the former mayor of Hartford and a co-author of the Yale report analyzing the guardrails, says the data also shows there鈥檚 room to change the policy.
鈥淭hey've taken that revenue off the table for investment in maintaining the current services, or investing in the state and families and communities today, or in other types of future oriented investment.鈥� he said.
Bronin said the data shows that with no more federal pandemic relief left to allocate, not adjusting the guardrails could mean big cuts for core services in 黑料新闻.
What we do know: lawmakers are going to keep talking about it, especially as committees debate bills, and Lamont unveils his budget proposal by Feb. 5.
