In a press conference accompanying the release of her second annual Comptroller's Report: Connecticut's Economic Health, Comptroller Nancy Wyman cautioned the legislature and the Governor not to make hasty decisions during budget creation for the upcoming biennium.

"We are heading in the right direction on the road to fiscal stability," said Wyman. "But we must avoid creating our own potholes in that road."

In the report, Wyman analyzes Connecticut's economic condition against demographic trends and other socioeconomic data, and uses that information to make her recommendations for the budget. In the "Comptroller's Watch List," Wyman points to four areas that she recommends the Governor and the legislature address:

1. Tax Cuts. Wyman pointed out that there are $700 million in tax cuts already on the books for implementation before the end of upcoming biennium. "We must view these tax reduction obligations in light of an overall state operating position that is still in deficit and still relies heavily on debt financing," said Wyman. Wyman recommended that the Governor and the legislature evaluate the tax reductions already on the books before creating any new ones and prioritize any tax cuts so that they assist the greatest number of Connecticut citizens.
2. Welfare Reserve Fund. Due to changes in federal funding, the legislature will exercise more discretion in distributing the federal welfare funds. "Connecticut will be receiving more welfare funds--at least initially--than we anticipated," said Wyman. "We should not use this excess money to plug any holes in our budget as some other states are doing." Wyman recommended establishing a welfare reserve fund to mitigate the impact of future downturns in the economy.
3. Health Care Reform. Citing the municipal employee health care program and a long-term health care insurance offering to state employees, Wyman urged the continuation of methodical health care reform. "Targeted, reasonable changes in the state's health care delivery system can preserve access AND effect savings," said Wyman. She recommended the legislature support two proposals that deal with uninsured children and incentives for business to provide health insurance to their employees. Wyman also intends to convene a task force this year to look at ways to provide all Connecticut residents with affordable long-term care insurance.
4. Conversion to Generally Accepted Accounting Principles (GAAP). Wyman said GAAP would put the state on sound fiscal footing and mirror those standard accounting principles used by both the private sector and Connecticut's municipalities. By law, GAAP is scheduled to take effect July 1; Wyman urged the legislature not to postpone the conversion. "If we are going to be--as the Governor says-- ' the state that thinks like a business,' we had better start acting like a business when it comes to our state budget." In recognition of the state's current financial position, Wyman recommended a phase-in of the GAAP conversion to reduce its overall fiscal impact.

"I believe we are in a better financial position than we were a year ago," Wyman said. "If we take the steps I've outlined in my Watch List, our state will be in an even stronger financial position this time next year."

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For Immediate Release
February 5, 1997
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