Author Archives: Robert Brewer

Let’s simplify the Rainy Day Fund, shall we? For several years, the balance grew and grew because we paid more in taxes than was needed to pay the state’s bills. That’s okay. That’s how it’s supposed to work. Some economists would argue that states should have reserves equal to at least 15% of their annual state budgets. Connecticut’s reserve of $1.4 billion, although substantial, is less only 8% of its budget. So it’s not like the extra taxes we have been paying in are out of sync with sound fiscal policy.

But now we find ourselves in the middle—at least I hope it’s the middle, because if it’s only the beginning, there may be no strategy that will help—of the worst economic crisis of our time. The collapse of the housing industry, the failure of some of the country’s largest financial institutions, two of the worst single day losses in stock market history, a federal bailout program that would have been unimaginable just six months ago—these are just a few of the scariest things. A current year state budget deficit of $300 million promises to keep growing in the months ahead, and the budget for the next biennium, 2009-2011, may well face the specter of revenue shortfalls in excess of $1 billion. Continue reading →