State Budget Process: A Better Educated Public Is A Better Served Public

April 20, 2009

The national housing crisis and ensuing credit and bank failures, to which government responded with massive bailouts, have resulted in tea parties across the country, including Connecticut. These tea parties are an expression of public outrage over excessive spending and participants’ fear of burying future generations in debt.

People are becoming more aware of how government spends their money, particularly in Connecticut where April 30th is this year’s tax freedom day, meaning state residents must work approximately 120 days this year to pay their taxes. Our tax freedom day occurs last. Governor M. Jodi Rell spoke for many when she said: “People have had it, and they are letting their collective voices be heard here in Hartford and across the state. The bloat of bureaucracy is no longer affordable. It is time to get back to basics.”

The legislature is now in the midst of a state budget debate that will significantly affect Connecticut’s future as no other has since the 1991 budget debate that ended with enactment of the state income tax.

Connecticut’s tax policy plays a large role in our state’s ability to prosper. Since the 25% of Connecticut’s 3.5 million residents who live in Fairfield County pay nearly 50% of the state’s income taxes, higher taxes would disproportionately affect them.

Recently, I hosted several public budget forums and sought feedback from constituents. Understandably, they want the state to cut spending and control taxes. They want to know if protecting state jobs is killing private sector jobs. Over 50,000 jobs were lost in the past several months, including 14,300 in February. Connecticut’s largest employer is now state government with about 50,000 employees.

To be clear, the Governor proposes a two-year state budget but only the legislature has the power to approve it. The Appropriations and Finance Committees can approve, reject, or change it before submitting it for a vote to the full legislature. Ultimately, the Governor can sign or veto the budget passed by the legislature. In the case of a veto, the legislature can attempt to override or adopt a new budget to submit to the Governor. Since Democrats have enough members to override a veto, it is especially important for the public to make its views known.

The state is facing a $7- to $9-billion deficit over the next two years. In February, the Governor proposed a budget that would close this gap, provide level funding for schools and towns, reduce some state mandates, consolidate 23 state agencies and commissions, seek labor concessions and use part of state’s rainy day fund.

In April, the legislature’s Democratic majority proposed a state budget that would raise taxes by $3.3 billion. Their proposal includes a tiered income tax increase up to 7.95%, a 30% surcharge on the corporation tax, and a 30% surcharge of the estate tax. Also, it eliminates 50 tax exemptions and tax credits on some our most vulnerable businesses, eliminates the property tax credit, seeks union concessions, accepts some of the Governor’s spending cuts, borrows to pay debt and uses all rainy day funds.

Most recently, the Republican minority offered an alternative budget proposal which, although it includes proposals from the Governor’s and Democrats’ proposal, goes much further. It does not call for any tax increases, freezes state employee wages for 18 months, requires six annual furlough days of each state employee and raises their medical co-pays, outsources some social services, levels funding for schools and towns, and provides some relief from state mandates.

With three major proposals on the table, there is much to debate. Please make your views known as the state budget we ultimately pass will affect you, and could change our beautiful state forever.