Despite Gov. Ned Lamont’s backing, legislative support for Connecticut’s fiscal guardrails – a series of bipartisan fiscal reforms enacted in 2017 –  has started to soften.   This comes at a critical juncture in Connecticut’s path toward a sustainable fiscal future, when the state has just started to dig itself out of a still enormous pile of pension debt – and, perhaps – as memories of the budgetary crises that dominated legislative sessions between 2010-17 begin to fade. To date, the guardrails have saved Connecticut $170 million in debt payments and can achieve billions in saving. It’s important to understand that because Connecticut’s pension obligations are contractual, our state’s first fiscal duty is to pay out these future pension payments come due. If that someday requires cutting vital programs or raising taxes (or both), state leaders will have no choice. To prevent unpalatable choices from having to be made, it makes sense to keep unfunded pension debt from growing out of control. Since 1971, Connecticut has been required to make Actuarially Determined Employer Contribution (ADEC) minimum payments to the pensions. During collective bargaining agreements with the State Employees Bargaining Agent Coalition (SEBAC), both the government union leaders and legislators in 1992 and 1997 agreed to reduce these ADEC payments in exchange for government worker pay increases. The debt began piling up. That is, until the General Assembly adopted a series of revenue and spending rules known collectively as the “fiscal guardrails” in 2017. These rules directed a portion of Connecticut’s incoming revenue into the Budget Reserve Fund, which can be used to pay down debt for both the State Employee Retirement System (SERS) and the State Teacher Retirement System (STRS). The fiscal guardrails have a somewhat abstract quality, which can make it difficult to understand both how they operate and their impact. So, in partnership with Reason Foundation, Yankee Institute commissioned dual actuarial pension models of SERS and STRS, which account for assumed rates of investment returns, payroll growth rates, cost-of-living adjustment provisions and mortality assumptions, among dozens of other variables. The Reason Foundation-Yankee Institute CT Pensions Dashboard  takes all these actuarial concepts into account. It allows users to adjust for a variety of variables, including how long the General Assembly will continue to allow additional contributions to pay down pension debt, if Connecticut will be able to hit the 6.9% assumed rate of return year after year, and how many recessions the country will endure in the coming decades. By adjusting for each of these contingencies, the Pensions Dashboard offers citizens and legislators a powerful tool for making informed budgeting decisions in the face of uncertainty. https://ct-pensions.reason.org/ Yankee Institute’s accompanying study, which follows the same modeling as the dashboard, shows the savings Connecticut can achieve if pensions are funded by $1.8 billion annually, the average amount the state has been contributing for nearly a decade in addition to its minimum ADEC payments. After peaking in 2017, unfunded pension liabilities have been steadily falling because of these additional contributions. Since the fiscal guardrails were enacted, Connecticut has contributed a total of $7.7 billion above the minimum ADEC payments.  If these contributions continue, SERS could save $3.8 billion and STRS could save $3.0 billion in interest payments, for a total savings of $6.8 billion over 25 years. In a sense, it’s like paying off more of a giant credit card bill; the state’s taxpayers end up less burdened by spiraling interest payments. Maintaining the fiscal guardrails has real and tangible benefits for ordinary residents. As Comptroller Sean Scanlon noted, the recent tax cuts were only made possible because, rather than going to interest payments, money had been freed up by “adhering to the guardrails.” Even more importantly, paying down pension debt now can save residents from potentially crippling tax hikes or program cuts later. Finally, paying down the pension debt during times of strong stock market performance helps safeguard against a “doomsday scenario” that would require raising taxes or cutting programs during a recession. Even in recessions, Connecticut is legally obligated to make ADEC payments toward the pensions. But the investment returns that subsidize those ADEC payments are often lower during recessions, increasing the likelihood that the state would need to take painful measures to free up the needed funds – right at the time when residents can least afford them. It’s never easy – and it’s never fun – for legislators to forgo the pleasure of spending now to pay for the mistakes of the past. But withstanding a little discomfort now will allow the people of our state – or their children – to avoid massive pain later. The case for keeping the fiscal guardrails is clear: they offer the promise of a future marked less by choices between tax increases and program cuts than by more stable state budgets, lower taxes and a growing state economy. David Flemming is Director of Policy & Research at the Yankee Institute.