STATE OF CONNECTICUT
OFFICE OF LEGISLATIVE RESEARCH
LEGISLATIVE
HISTORY OF BALANCED BUDGET LAW
February 19, 2002
2002-R-0170
By: Lawrence
K. Furbish, Director
You asked for a legislative history of the
law requiring a balanced budget, including legislative intent and a brief description
of the political circumstances surrounding its passage.
SUMMARY
Article XXVIII of the Amendments to the Connecticut
Constitution specifies that "general budget expenditures authorized for
any fiscal year shall not exceed the estimated amount of revenue for such
fiscal year. " This amendment was adopted by the
General Assembly in August of 1991 (House Joint Resolution 205) and approved by
the voters in November 1992. It has been in effect since that date.
The General Assembly debate on this resolution
barely mentions the balanced budget provision. Members spent most of the time
discussing a provision of the resolution that established a spending cap
prohibiting increases in general budget expenditures above the previous year's
level plus an amount equal to the percentage increase in either per capita
income or inflation, whichever is greater. The resolution allowed expenditures
to exceed the cap whenever the governor declared an emergency or the existence
of "extraordinary circumstances. "
Passage of the Constitutional Amendment was
inextricable linked with the adoption of a state income tax law during the 1991
Special Session. The General Assembly had passed three budgets (one during the
regular session and two during the special session. Governor Weicker vetoed all three of these budgets before the
General Assembly finally adopted the income tax on August 21. The balanced
budget provision was most likely intended to prohibit the General Assembly from
adopting a budget with a built-in deficit, but nowhere in the legislative
debate does any legislator actually say anything to that effect. The spending
cap provisions were seen as ways to keep the state from overspending once the
anticipated revenue from the new income tax began flowing into state coffers.
BACKGROUND
Connecticut's
economy prospered in the mid 1980s and from 1984 to 1987 large budget surpluses
allowed expansion of state programs. By 1988 the economy began to contract
quickly and from 1989 to 1991 some program expansions were reversed and more
than $ 2 billion in tax increases were imposed. In his campaign for governor, Lowell Weicker opposed an income tax. But after taking office and
examining the situation as laid out by his Office of Policy and Management
secretary William Cibes, he changed his mind and
concluded that an income tax was the best way to deal with Connecticut's
budget deficit.
In April 1991, stating that
the state faced a $ 2. 4 billion budget gap,
Governor Weicker laid off over 2,500 state employees
(in addition to almost 1,000 who would have been laid off pursuant to the
budget he presented to the General Assembly in February). He also ordered
two-day-a-month state agency shutdowns commencing in July.
The General Assembly was reluctant to enact
an income tax, and the budget it passed during the regular session (PA 91-409)
established an income tax only on people working in Connecticut who did not
live here (the commuter tax). Governor Weicker vetoed
this act and the General Assembly was not able to pass another before the end
of the regular session.
In June the General Assembly went into
Special Session and passed its second budget June 30, the last day of the
fiscal year (PA 91-1, June Special Session). This was one of the so-called
"coalition" budgets passed by a group of republicans and democrats
who opposed the income tax. It expanded the sales tax and included the commuter
tax. Governor Weicker vetoed this act and on July 2
announced implementation of an essential services plan to curtail executive
department services until a budget was enacted. Using his emergency powers he
shut down all but essential state services.
On August 4, the General Assembly adopted
another "coalition" budget (PA 91-2, June Special Session). This
budget also expanded the sales tax and included a commuter tax. Governor Weicker vetoed it.
On August 21, the House, by a vote of 75 to
73, and the Senate, by a vote of 18 to 18 with the tie broken by the lieutenant
governor, passed SB 2010 which established a state income tax (PA 91-3, June
Special Session). The governor signed the bill that day ending the long
confrontation over the budget and tax package. The bill contained a spending
cap provision, and the House and Senate on the same day took final action on
HJR 205, the constitutional balanced budget amendment.
BALANCED
BUDGET AMENDMENT
House Joint Resolution 205 was sponsored by
House Speaker Richard Balducci and Senate President
Pro Tempore John Larson. It was introduced in the House on July 1 under a rules
suspension. Representative Shaun McNally brought out the resolution. He
observed that the General Assembly had been talking about the concept of
statutory spending controls during its budget deliberations over the proceeding
weeks but that now it was ready "to take the historic step of working to
approve and send to the voters of the State of Connecticut,
a constitutional amendment imposing a limit on State expenditures. "
McNally described the proposed amendment as
consisting of three sections. The first "will require for the first time
in our State Constitution a balanced budget. "
The second established the spending cap mechanism to control increases in state
spending, and the third required unappropriated
surplus to be used to create a rainy day fund, reduce bonded indebtedness, or
for other purposes authorized by at least three-fifths of the members of each
house of the General Assembly.
McNally went on to say that it was
"critical to try to revise some of the spending habits in the State of Connecticut. " He characterized the amendment as
providing "the potential for future spending control" not any
"guarantees. " Representative Maddox
expressed the view that "this item is probably the single most important
item that we will be taking up this session. "
The remainder of the debate concerned the
definition of certain terms used in the spending cap section of the resolution.
McNally responded to questions by explaining that these definitions would have
to be adopted by a three-fifths vote of the General Assembly at some future
time. He said that later that night the House would take up a budget and tax
package that would include "a temporary statutory spending cap with
definition language. " On a roll call vote the
House passed the resolution by a vote of 141 to 7 with 3 absent and not voting.
The Senate did not take up the resolution
until August 21 when the next budget was being debated. Senator Herbst brought out the resolution,
and Senator Spellman offered Senate Amendment "A". The amendment
related to the spending cap provision and changed the word "greater"
to "lesser," which had the effect of decreasing the amount of
possible spending increase. After some debate, the Senate adopted the amendment
by a vote of 22 to 14 and then passed the resolution 36 to 0.
When the House took up the amended
resolution, Representative McNally moved to reject the amendment.
Representative Maddox spoke against rejection and asked for a roll call.
Without further debate, the motion to reject passed 81 to 63 with 7 members
absent and not voting.
Back in the Senate, Senator Spellman moved
for passage in concurrence with the House. Senator Hale then moved for readoption of Senate A. Senators Hale, Freedman, and
Munster spoke in favor of readoption, but the Senate
voted 22 to 14 against readoption. It then passed the
resolution 34 to 2.
The same day that the constitutional
amendment was passed, the House and Senate adopted SB 2010 (PA 91-3, June
Special Session), which contained not only the state income tax, but also a
statutory spending cap (Section 30, codified as CGS § 2-33a). Apparently this
spending cap provision was intended to be temporary until the General Assembly
adopted the necessary definitions to implement the constitutional spending cap.
PA 91-3, June Special Session did not contain any balanced budget provisions.
SUBSEQUENT
EVENTS
In November 1992 the voters overwhelmingly
approved the constitutional amendment, which took effect on November 25. The
General Assembly never adopted definitions to implement the spending cap
provisions in the constitutional amendment. No definitions are required for the
balanced budget provision, so it has been in effect since 1992.
On January 11, 1993, House Minority Leader
Edward Krawiecki asked for a formal Attorney
General's opinion on several issues regarding the spending cap and one
regarding the balanced budget provision. The latter question was
whether the balanced budget provision prohibits the passage of deficiency
legislation after the start of the fiscal year. The Attorney General, in a
letter dated April
14, 1993, responded that the balanced budget
amendment "limits" the enactment of such legislation. Because
deficiency legislation involves expenditures above the originally budgeted
appropriations, it is only appropriate when there are additional revenues above
the originally budgeted amounts.
The gist of his responses concerning the
spending cap were that the statutory spending cap remains in effect until the
General Assembly properly adopts the definitions necessary to implement the
constitutional spending cap.
LKF: eh