The Kohut Formula For Ending Budget Impasse

Hartford is a fiscal train wreck. City policy wonk Jeff Kohut in this commentary offers a menu of items to end the derailment.

Regarding the current, derailed budget process in Hartford; it is obvious that both massive cuts in state spending and massive new revenue flows are needed to shore-up our collapsing state economy.

There are obvious, appropriate areas in which to find massive spending reduction opportunities and massive revenue stream opportunities that have not been thoroughly or properly addressed to this point. These areas being:
1) Massive reapportionment of state aid to municipalities.
2) A plan to examine and massively reduce state expenditures on goods and services–especially in the area of state expenditures on energy and especially in regard to GA/DEEP public-utility policy.
3) A plan to revisit taxes on alcohol and other abused, legal substances with the intent of recouping state spending related to the abuse of these substances–especially alcohol.

Municipal Aid Reapportionment Formula:
Massive cuts and reapportionments are indicated. Since cities provide the critical, regional services and infrastructure for the state, in order for the state to remain viable, the well-being and functionality of the cities must be promoted as General Priority #1 for the state. In this regard, the public safety, social services, and infrastructure needs of the major urban centers must not incur any cuts, and, indeed must even be increased–based on economically strategic considerations. School aid for the cities must take priority over suburban school aid since the urban schools are involved in the maintenance of family and social integrity in the cities well beyond the role of the schools in the socially stable suburbs.

This long-time Democratic and lifelong Bridgeporter-Connecticutian sees an approach that is married to current, indicated, largely accepted, environmental/demographic considerations that would base apportioned cuts and funding increases on municipal population densities, whereby percentage reductions in state outlays to municipalities would be based on population densities below the population mean of cities and towns, and increases for those above the population mean would be enacted, such that the viability of higher-density municipalities–inasmuch as population density identifies the extant, efficient, essential supportive services and infrastructure-base carrying the needs of the bulk of the state–would be thereby furthered.

The state-municipal aid “formula” suggested above (the GA Office of Fiscal Analysis can crunch all of the up-to-date data in this regard), would work thusly (per generalized, roughly-calculated example–extrapolated from 2010 Census data): Bridgeport, with a population of roughly 146,000 and area of approximately 16 square miles, has a population density of approximately 9125 residents/sq. mi. If we think in terms of the mean population density of Connecticut towns and cities as being, roughly, an average of the three representative “greatest density,” “middle density,” and “lowest density” municipalities–e.g., an average of Bridgeport, Bristol (61,000/26.8 sq. mi.), and Cornwall (1500/46 sq. mi.) densities–we find a mean municipal population density of approximately (9125 + 2276 + 33)/3 = 3811. This number–3811–can serve as the population density balancing point around which state aid might be apportioned in the “efficiency/efficacy terms alluded to previously.

Regarding this thesis; the total of all forms of municipal aid for towns below this average would decrease by its density proportion with respect to this average, to a maximum decrease (including education and other state municipal aid) of 50%, while the aid to municipalities above this average could as much as double, based on a ranking within the 90th percentile of population densities. So places such as Greenwich and Putnam, with densities of 1294 and 490, would see aid cuts that would probably be somewhere in 30%-40% range, while towns such as New Haven (density 6878), and Hartford (density 7109) would see increases of as much 70%-80%.

State aid to municipalities totals about $5.1 billion annually, with the handful of the largest cities of the state receiving perhaps $1.5 billion of that amount, which means that about $3.5 billion is going to less densely populated suburbs of these areas, which are consuming services and infrastructure access from the urban centers while at the same time literally stealing suburb-seeking tax base from these population centers. Taking $1 billion from the “consumer” suburbs and redistributing it among the cities, based on population density, can only help to fortify and expand the city-dependent state economy and thereby all of the state’s municipalities. $2 billion of the remaining $2.6 billion could then be used for bridging the current $3.5 billion budget gap, which leaves $600 million for state aid to the suburbs and rural areas of the state. This situation would create structural change in all aspects of Connecticut residential and economic/business life. It would point Connecticut–by forces of economics and policy–in the urban-friendly direction that the environmental and economic realities of 21st century Planet Earth demand.

State Energy and Purchasing Policy:
And while the budget might be balanced through a rationally derived and applied formula in regard to municipal aid, many other factors need to be imposed on the expenditure and revenue sides of the state’s fiscal equation, e.g., the state’s expenditures for energy and other massive, state-level purchases of goods and services must be examined and negotiated to come into line with costs for such in other states–especially in regard to energy costs. The policies of DEEP, regarding energy costs in the state, are obviously inappropriate and are playing into the major, destructive role of unreasonably high energy costs to the Connecticut economy.

The Wages of Sin:
In terms of revenue, we must look at sin taxes inasmuch as substance abuse is responsible for upwards of 13% of the state budget (per a Columbia University study undertaken in 1998–things haven’t improved in that regard), with alcohol abuse alone costing the state 10% of its budget. Special taxes on alcoholic beverages must be levied by special legislative act such that at least half of the cost to the state budget related to alcohol abuse is covered by state taxes on the sale of alcoholic beverages. Furthermore, special taxes on heavily abused, legal narcotic substances must also be enacted. AND THESE TAXES MUST BE ENACTED AND IMPOSED DURING SPECIAL BUDGET SESSION IN THE NEXT FEW WEEKS. These taxes could–should–result in $1-$2 billion in revenue on a yearly basis.

Media Budget Nudging:
In order to expedite GA and gubernatorial action on our destructively delayed budget process, the Connecticut media must apply intense scrutiny and focus on the legislative leadership of the GA and Governor, in regard to the budget process, on a daily basis–giving such coverage front-page status, along with analyses of the destructive effects of the delayed adoption and implementation of a fiscally rational budget, and perhaps identifying and focusing on obstructionist elements and their motives in this regard.