A lack of strategic and long-term state budget planning, combined with some short-sighted fiscal choices and the declining economy, present unprecedented budget challenges for Connecticut. Just as family needs are rising because of the economic recession, Connecticut's state revenues are falling far short of what is needed to maintain current services. Short-term budget gimmicks used to achieve a "balanced" budget in previous years (such as the use of one-time revenues) have created budget "holes" in future years.

While Connecticut has the capacity to solve these fiscal problems and address our state's needs, it is not meeting the challenge. In 2006, the Federal Reserve Bank of Boston ranked Connecticut highest among all states in "fiscal capacity," our ability to meet our state's spending needs given our tax capacity. Yet we lag behind other states in how much we invest as a percentage of our state's personal income. For example, on state and local spending on all education, Connecticut ranks 4th lowest (47th). This brief suggests ways in which Connecticut can put its fiscal house in order. (July 2010)

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