Reducing State Spending is the First Step Towards a Balanced Budget

April 28, 2009

With just weeks remaining in the legislative session, the General Assembly has yet to agree on a state budget. While a great deal of political posturing has taken place, little has been done to rectify the approximately $1 billion deficit that still remains for the current fiscal year that ends June 30th and the more than $8 billion deficit slated for the next two years.

Over the past year, many businesses in our state have had to make the very difficult decisions that go along with reducing costs. A frighteningly large number have been forced to lay off employees, while others have shut down their operations altogether. This has resulted in the loss of approximately 50,000 jobs in Connecticut and the outlook for the rest of 2009 is not encouraging.

When Gov. M. Jodi Rell addressed the General Assembly back in February to unveil her budget, she called attention to the extraordinary challenges Connecticut faces over the next two years. She made it clear that the legislature would be faced with some of the same challenges that many families and businesses are experiencing during these uncertain times. Her budget made some very difficult choices by reducing the size of state government while maintaining funding for schools and town aid. She did so without raising taxes, something that leading experts including President Obama have said is important to prevent further damage to our economy.

That is why it was so disappointing when the majority party released their budget earlier this month and they chose to rely mostly on tax increases rather than reductions to wasteful government spending, which has increased 36 percent (nearly $5 billion) over the past six years. As a member of the Finance, Revenue and Bonding Committee, I remain troubled that tax increases were chosen as the first resort to address the budget situation. Tax increases that, if enacted, would account for the largest tax increase in state history.

In addition to income tax increases, their budget phases out the $500 property tax credit that many middle income residents rely upon to reduce their local tax burden. This credit is even more important as some municipalities look to increase taxes too.

What’s more, products that are currently exempt from the sales tax such as college text books, child safety car seats, accountant services, computer data processing equipment for businesses would now be taxed, creating greater expenses for students, families and business alike.

What this measure does not do is make structural changes to the way government is operated. Instead it relies on federal stimulus money to pay for ongoing expenditures to get through the next two years and would authorize the use of short term borrowing to get us through the rest of the current fiscal year, which is irresponsible.

If history has taught us anything, it is that we cannot tax our way out of difficult times, let alone a recession. The last time the state came anywhere close to the budget shortfall we are experiencing today was when the income tax was established. The income tax, which brought in record revenue, also brought with it a new age of double-digit percentage spending increases. It is these spending increases coupled with the downturn in the economy that has made the budget deficit what is today. We need to avoid creating further damage by increasing taxes.