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Saving for a Rainy Day?
In tough times, comptroller Wyman says, state must tighten fiscal belt
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Business New Haven
9/17/2001
By:
BNH
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The first female elected comptroller in Connecticut history, Nancy Wyman is responsible for paying the state's bills, keeping its books and representing the taxpayers in state budget debates. Previously Wyman, a Democrat, served as state representative (1987-1995) from the 53rd District. There she was house chairperson of the Education Committee and chairperson of the Appropriations Subcommittee on Elementary and Secondary Education. Wyman and her husband, Michael, live in Tolland. They have two daughters and two grandchildren.
Where the dividing line between the responsibilities of your office and the Treasurer's office?
I am the person who reports monthly the forecasts for the state's economy. I am also the payroll officer, the accountant and I procure health care [insurance] for about 188,000 people in this state - state employees and their families, retirees and their families.
What does our 'fiscal fitness' report say today?
We have just put out an end-of-the-year summary about where the [state's] economy is and where we stand. We have declining tax revenues, and we're going to see even smaller surpluses in the nest fiscal [2002] year. We are seeing what we call a 'growth recession.' Corporate profits are down; we are seeing less revenues, and with the stock market the way it is right now we're not seeing the type of capital gains [tax revenues] we have seen over the past couple of years.
As late as June 1 you talked about rising income-tax revenues driving up the budget surplus to $664 million for fiscal 2001. Three months later, that figure was $30 million. Did the General Assembly just spend it all, or did something else happen in those 90 days?
It's a combination of a few things. When we came out with that [June 1] report, we thought revenues would come in higher. Our growth surplus at the end of this [fiscal] year was $606.8 million. The governor and the General Assembly appropriated $576.2 million [in new spending].
So they spent it?
They spent it. It didn't go into the Rainy Day fund or paying down the debt. What they left in that surplus was the $30.6 million that would automatically go into the state's emergency Rainy Day fund.
How much does the state presently owe?
Right now, under the bonding debt, we have about $10.3 billion in bonded debt. We [have] about $9 billion in unfunded liability debt.
What does that mean?
The bonded debt is basically the projects that we did bonds for - it could be schools, it could be roads, it could be little projects in towns, or dams…The unfunded liability is basically our retirement system and the retirement fund [for which] we don't have a 100-percent filled account.
So that obligation will have to come from future tax revenues?
All of that money will have to come from future tax revenues. My biggest fear is that we continue to bond - this year alone we spent $527 million in bonded money, new money. My problem is that we're not paying down the debt. And what's going to happen is, we're going to hand this over to our children and our grandchildren.
How does our debt situation in 2001 stack up historically?
One way of looking at it is, we have the highest per-capita debt in the nation. And at a time when the economy is looking good, my feeling is that you don't bond more; you pay down [debt] so that when the economy slows down our bonded debt is lower.
Politically, obviously both parties had to cooperate to get us to this position - is that not true?
Absolutely. There's no finger-pointing here. This is the same type of thing that happened in the late 980s and early 1990s when we saw this major recession. We in the state did not look forward to paying down some of this debt [by] reserving more money than the five percent we have to put away in our Rainy Day fund. In all the years that we've had these surpluses, we should have been paying down debt and putting more money into the Rainy Day fund.
That remaining $30 million went into the so-called Rainy Day fund. What is the size of that fund today - and what should it be?
It's basically about $600 million right now - about five percent of the budget. Let me explain it this way. What we, state government, have done is to cut taxes when the economy is really good. So when the economy is good for the state, it's good for the taxpayers of the state. When the economy goes bad, it's bad for the state and very bad for the people back home. Then we have to put our hand in their pocket and increase taxes. We shouldn't be doing that. In 1989, we took half a billion dollars from the Rainy Day fund and spent the entire [amount] within two years. Then 1990 came, we had a billion-dollar debt and we had to go in when people were hurting and implement an income tax.
What does the 2002 budget look like to you now - essentially balanced or with a slight surplus?
Right now, the governor and the legislature have put in about a $150,000 surplus. If you're talking about a $13 billion budget, that's basically nothing. And if you look at history, we've always gone over $150,000 in [annual budget] deficiencies.
How would you assess consumer confidence right now?
Consumer spending is down. We ended [fiscal 2001] with a 3.5-percent growth in sales, compared to [approximately] five-percent growth in [previous] years. So we are seeing a slowdown. I speak to a lot of business people, and small businesses are feeling the pinch happening now. I spoke to a gentleman just today who owns a limousine company, and he said companies aren't flying people in for meetings any more; they're doing everything by teleconferencing.
As a Democrat, to what extent do you or do you not see eye to eye with the governor on issues of taxation and spending?
My disagreements have been with the legislature and the governor's budget office on what they have done with surplus monies, and you can't point your finger at one without pointing your finger at the other.
Is that why we don't hear Nancy Wyman's name mentioned as a possible Democratic nominee for governor?
No. Nancy Wyman took her name out of the race for governor on July 3.
Why?
Because I didn't think the timing was right for me personally, and I really love my job as state comptroller.
What else would you like the business community to know about the state's economy in general - or your office in particular?
This state has the most liberal accounting practices in the whole country. We do not [practice] Generally Accepted Accounting Principles [GAAP]. We require every business and every municipality in the state that they must report under GAAP, while we, the state, do not. My plea to the business community is to come up to the Capitol with me and help fight to help implement [GAAP] in the state. As far as the economy goes, I would hope we could open the doors a little more to have small and mid-sized businesses able to do business with the state.
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