balance should be 10 percent of the
government's annual expenditures (or
roughly one month's cash flow). The
state of Connecticut's available fund
balance is negative five percent of our
expenditures. In accounting, the pres-
ence of an available fund balance, or
a portion of it, is considered a "rainy
available fund balance of $922 million.
We have artificially created a rainy day
fund by dividing the deficit available
fund balance into two parts: (1) a posi-
tive $1.4 billion we call the rainy day
fund, and (2) an even bigger negative
offset of $2.3 billion. This is not a rainy
An analysis, done by the National
shows 14 states with an available fund
balance of less than one percent of
expenditures. Of that, we are one of
just four states with a deficit of avail-
able fund balance.
measured on the "full accrual" basis of
accounting. Here, our total assets are
$16 billion. Our total reported liabilities
are $25 billion. However, our reported
liabilities do not include all our liabilities.
other post-employment benefit (OPEB)
liabilities are being amortized onto the
balance sheet over 30 years as
As of June 30, 2009, only 2/30 of our
ed liabilities on the balance sheet.
we would report $70 billion in total liabil-
ities. Our liabilities are almost 4.5 times
our assets! According to Connecticut's
Office of Fiscal Analysis, we have the
highest debt per capita of all 50 states.
When we look at debt per capita as a
percentage of personal income, we
drop to number 48, with only Hawaii
and Massachusetts being higher.
called "net assets." Our net assets,
based on the June 30, 2009 financial
statements, are a deficit of $8.8 billion.
When we pull out the net amount we
have invested into capital assets and
restricted equity, our available net
assets are reported as a deficit of $17
billion. If we were to add the amount of
pension and OPEB liability that has not
been amortized onto the balance sheet
yet, this figure becomes a deficit bal-
ance of $62 billion.
result of a bad economy. Our deficit
balance was billions of dollars even in
good economic times.
ified cash basis" of accounting.
Essentially, expenditures are recorded
as slowly as possible on the cash basis
and revenues are recorded as quickly
as possible on the modified accrual
basis. When we borrow money, we
treat the proceeds as revenue. This
allows us to balance the budget by tak-
ing out new debt.
guards regarding a balanced budget:
expenditure limitations and a require-
ment to use any annual surpluses to
reduce debt or increase the aforemen-
tioned rainy day fund. However, we
don't really follow these because we