1. Presentation for Connecticut Alliance for Basic Human Needs 11/18/2016
The State Economy, The State Budget and The State of our Children Derek Thomas | Fiscal Policy Fellow Ray Noonan| Associate Policy Fellow
Presentation for Connecticut Alliance for Basic Human Needs 11/18/2016

2. Agenda – Presentation for CABHN
The Recovery Has Left Too Many Families Behind
Long-term economic trends
New data – 1-year trends
And They Aren’t Being Prioritized in State Budget
Budget trends – spending
Budget trends – revenue
Looking Forward – Building on Our Strengths
Policy recommendations
Resources and upcoming research

3. The Recovery Has Left Too Many Families Behind
Unemployment: has recovered for whites and college-educated workers, but not for workers of color and the less-educated
Wages: have increased for the top 10% of earners over the last 15 years, but the middle class has experienced a 2% cut
Gap between blacks, Latinos, and whites has widened since pre-recession
Poverty: rates for blacks and Latinos still 14.4% and 18.9% higher than whites.
child poverty (14.5%) higher than pre-recession levels and didn’t change last year
Jobs Swap: share of low-wage work has increased by 20% while the share of high-wage work decreased by 13%

4. Spending on Children’s Budget – Short Term
Source: Connecticut Voices analysis of Office of Fiscal Analysis budget books

5. Spending on Children’s Budget – Short Term
1.4%
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on estimated growth of 0.5 and 0.12%

6. Spending on Children’s Budget – Short Term
BEA Total Personal Income, 2008 – and 2017 based on OPM estimates

7. Spending on Children’s Budget – Trends
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on estimated growth of 0.5 and 0.12%

8. Spending on Children’s Budget – Trends
BEA Total Personal Income, 2008 – and 2017 based on OPM estimates

9. Spending – Non Children’s Budget Trends
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on estimated growth of 0.5 and 0.12%

10. Spending – Non Children’s Budget Trends
BEA Total Personal Income, 2008 – and 2017 based on OPM estimates

11. General Fund Spending Trends
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on est. growth of 0.5 and 0.12%
*To ensure comparability with prior years, this analysis includes the federal share of Medicaid in “General Fund” beginning in For example, in 2017, total Medicaid spending is nearly $5.964B, but $3.5B was backed out to remain under the spending cap (known as Net Funding). We add that back in, and then we estimate what share of that is spent on children, meaning while the state GF is ~$18B, ours is ~$21.6B. We estimate that of the $5.964B, $1.267B is spent on children.

12. General Fund Spending Trends
Data labels denote share of total general fund
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on est. growth of 0.5 and 0.12%
*To ensure comparability with prior years, this analysis includes the federal share of Medicaid in “General Fund” beginning in For example, in 2017, total Medicaid spending is $6.2B, but $3.72B was backed out to remain under the spending cap (known as Net Funding). We add that back in, and then we estimate what share of that is spent on children, meaning while the state GF is ~$18B, ours is ~$21.5B. We estimate that of the $6.2B, $1.3B is spent on children.

13. General Fund Spending Trends

14. Revenue Trends
BEA Total Personal Income, 2008 – and 2017 based on OPM estimates

15. Revenue Trends
Inflation adjusted using CPI-AUC seasonally adjusted, annual averages 2008 – and 2017 based on estimated growth of 0.5 and .12%

16. Revenue Trends
BEA Total Personal Income, 2008 – and 2017 based on OPM estimates

17. The Cost of an Inequitable Tax System
Revenue gained if rates were equal: $2,056,986,667
Source: Institute on Taxation and Economic Policy

18. OFA Out Year Current Services Projections
Looking Forward
  OFA Out Year Current Services Projections
FY 18 
FY 19  
FY 20
Approp.
Revenue
Surplus/ (Deficit)
General
$19,132.2
$17,858.9
$1,273.3
$19,739.2
$18,311.3
$1,427.9
$20,368.9
$18,838.7
$1,530.20
Special Trans.
$1,643.8
$1,648.6
$4.8
$1,742
$1,696.2
$45.8
$1,841.2
$1,749.2
$92
Other Approp.
$233.3
$239.9
$6.6
$236.5
$3.40
$3.4
TOTAL
$21,009.2
$19,747.4
$1,261.9
$21,717.5
$20,247.4
$1,470
$22,446.3
$20,827.8
$1,618.80

19. Building an Equitable and Sustainable Revenue System
Sufficiency and Equity
A balanced approach includes new revenue, rather than a cuts-only approach
Reform property tax to address “municipal gap”, reduce regressivity, and equalize school funding
Transparency and Accountability
Reform tax expenditures- all areas of Connecticut’s budget should be evaluated and subject to routine public scrutiny
Return to current services budgeting to ensure transparency and accountability
Reliability: Maintain a Robust State Budget Reserve Fund
To offset volatility in income tax

20. Resources – Fiscal & Economic Security
Annual Reports
State of Working CT:
Poverty, Health and Income – Review of American Community Survey 1-Year Data:
Children’s Budget:
Recent Reports
Reviewing Tax Expenditures – Improving Transparency and Accountability in Over $7 Billion of Off-the-Books Public Spending:
Revenue Options are Crucial to Maintaining Public Investments that Promote Prosperity:
Restoring Connecticut's Earned Income Tax Credit Makes Sense:
Mapping Disparities by Race and Place (American Community Survey 5-Year Data):
Policy Primer: Reforming Our Property Tax System:

21. Presentation for CABHN
CONTACT INFORMATION
Derek Thomas, Fiscal Policy Fellow
(x114)
Ray Noonan, Associate Policy Fellow
(x113)
FIND US
Website:
Twitter
Facebook:
Tableau: