State Budget Practice Report Cards and Budget Resource Guide

Over decades, Connecticut has dug itself into a pension hole that left it with a D average in legacy costs for fiscal 2016 through 2018, the second-lowest mark possible, even though the state contributed close to 100 percent of the actuarially recommended amount to the public employee retirement system. 

Because of chronic underfunding in past years, Connecticut’s pension funding level was only 43.8 percent as of 2017, almost 25 percentage points lower than the total for US states. Only Illinois, Kentucky, and New Jersey had lower levels. A lack of actuarially determined annual funding for other postemployment benefits, principally health care, also contributed to Connecticut’s poor showing in legacy costs.

Digging out will be particularly difficult for Connecticut: Its total revenues dropped slightly in fiscal 2018 (while most other states’ revenues were on the upswing). As a result, the state has relied on one-time budget maneuvers, which earned it a D in the category for 2018 and a C average for the three years examined. Connecticut also relied on one-time revenues from a tax amnesty program to balance its 2018 budget.

Connecticut’s best performance was in budget forecasting, in which it received straight As. The state relies on consensus revenue forecasting—a best practice identified by the Volcker Alliance. It produces multiyear expenditure and revenue forecasts and also provides evidence to support revenue estimates. 

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To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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