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June 2, 2015

Tax-Heavy Budget Is A Bad Deal For CT

Hartford Courant Editorial

The General Assembly should reject the budget deal that was reached between Gov. Dannel P. Malloy and Democratic legislators over the weekend.

As of Monday afternoon, the two-year, $40 billion deal appeared to dump the state’s financial problems on the private sector’s back while growing state spending and asking nothing from well-compensated state employees.

It would raise taxes on corporations, hospitals, the middle class and the rich — four years after the largest tax hike in state history.

The deal fails to recognize that Connecticut now has the highest joblessness rate in New England and a shrinking population. General Electric, headquartered in Fairfield, issued an extraordinary statement Monday questioning “whether it makes any sense to continue to be located in this state.” Aetna and Travelers made similar noises.

Lawmakers must come up with a spending plan for the next two fiscal years this week. The state is headed for a $3 billion budget deficit if it continues spending the way it does and if revenues continue falling short of the Capitol’s rosy expectations. But the deal-makers cut little spending over the weekend and instead went for taxes.

For example, the property tax credit for households would drop from $300 to $200 under the deal — a blow to the middle class.

Corporations would see a tripling of taxes on data services and other new taxes that are driving some of the state’s leading employers to threaten to leave.

There are some good things in the deal, such as funding for transportation infrastructure.

But the timing stinks for new taxes.

Connecticut has gained back only 78 percent of jobs lost in the recession; the nation has recovered 132 percent of its job losses.

Meanwhile, there seems no curb on spending.

The state gave out raises of up to 12 percent for 200 political appointees in December and recently agreed to 9 percent raises for state troopers over the next three years. Some troopers can still earn more from their state pensions than they do from their salaries.

In this budget deal, no hard choices were made.

No Republicans were allowed in the closed-door discussions.

State employee unions made it clear not to expect concessions, and they got their wish.

This budget deal should not pass.