Sen. Hwang: Band-Aid Approach Won’t Fix State Budget

June 25, 2015

The 28th District Senator calls on the Democratic majority and Governor Malloy to scrap the budget and work in a bipartisan manner on a new one.

HARTFORD – State Sen. Tony Hwang (R-28) joined his Republicans colleagues in both chambers of the Connecticut General Assembly in calling for Democratic lawmakers and Governor Malloy to scrap the state budget, put an end to closed door negotiations, and restart the state budget process.

Republicans delivered their message Tuesday during a press conference in the Legislative Office Building, while Democrats were meeting to discuss Gov. Malloy’s proposal to scale back some of the historic tax hikes in the $40 billion budget – specifically some of those that have prompted some of the state’s largest employers to look into leaving Connecticut for more tax-friendly, pro-business states – and to make up for that reduction in revenue by placing an even greater burden on already thin-stretched critical social services for the vulnerable in our communities. The Governor and Democrats are reportedly looking to modify the budget through language in implementer bills, which are scheduled to be taken up during a Special Session next week.

“As Democrats meet today to discuss potential changes to the state budget, Republicans are demanding that lawmakers push for change in the process and put an end to closed door negotiations,” Senate Minority Leader Len Fasano (R-North Haven) said. “Operating in the dark with no transparency whatsoever created a budget that is seen as universally damaging to jobs, the economy, the middle class, seniors and health care access. This needs to be completely scrapped so that lawmakers from both sides of the aisle can start anew together.”

“From process to finished product, this budget has failed the people of Connecticut,” Sen. Hwang said. “Instead of one party secluding themselves and trying to fix it through a piecemeal, Band-Aid approach, we need to start from scratch and work together to create a budget that we all can support and be proud of and that truly reflects the premise of ‘shared sacrifice.’”

Republican lawmakers pointed to the following burdens on Connecticut taxpayers and employers found in Democrat’s budget.

The budget hits the middle class directly:

  • It repeals the scheduled sales tax exemption for clothing/footwear under $50 and limits the sales tax holiday, imposing a $280 million tax hike on children’s clothing and family necessities
  • Reduces the Property Tax Credit from $300 to $200 — 66 percent of those who currently utilize the credit have annual incomes less than $75,000
  • Delays the scheduled increase in the personal exemption for single filers — 90 percent of which have incomes of $75,000 or less
  • Implements a sales tax on car washes, a new tax totaling $13.6 million; on motor vehicle parking, a new tax totaling $12.2 million; and on water companies, a new tax totaling $8 million
  • It imposes $700 million in tax hikes on businesses that will have a trickle-down effect and a devastating impact on jobs at all income levels

The budget hits hospitals & health care access:

  • The budget raises taxes on hospitals by $211 million annually and adds a new tax to ambulatory surgical centers of $35 million, which will result in higher health care costs for patients and has led to job cuts at hospitals and health care facilities.
  • It also reduces Medicaid Provider Rates significantly, likely resulting in a decrease in primary doctors that accept Medicaid coverage, making it more difficult for seniors and lower income families to access care.

The budget hits seniors:

  • Increases fees and closes intake to the state’s leading “Aging in Place” program, delaying care to seniors in need.
  • By reducing Medicaid Provider Rates significantly, many doctors may drop Medicaid coverage which will make it more challenging for seniors to find care. Increased costs could also result, further burdening seniors.

The budget’s municipal aid plan raises questions:

  • This budget actually reduces funding for most regional cooperation programs. All but two Councils of Government (COGs) are anticipated to receive less funding in fiscal year 2017 than they will in fiscal year 2016.
  • This budget’s approach to property taxes also could create issues for special taxing districts that could lead to increased taxes on residential and commercial property to compensate for motor vehicle mill rate reductions that these districts will not receive reimbursement for.
  • Some towns will actually lose monies and receive no state reimbursement under this plan if they have an increase in their mill rate between fiscal years 2015 and 2016 whereby the increase in fiscal year 2016 puts the town over the mill rate cap.

This budget does not provide reliable transportation funding:

  • It continues to divert funds intended for transportation to other projects
  • New transportation funding ends up totaling only $64 million over the next two years

The impending deficit raises questions about the reliability of all new funding:

  • According to projections from the nonpartisan Office of Fiscal Analysis, Connecticut will face a $1.6 billion deficit in fiscal years 2018/2019, a number that is likely to grow amid increased state bonding, exceeding of the spending cap, and no effort to make structural changes to spending.
  • With this deficit, it is likely that new funding will eventually be cut – meaning municipal aid and transportation dollars could be first on the chopping block. We’ve seen this before; for example, this budget proposes closing the deficit in FY 2015 in part by reducing aid promised to municipalities by $12.7 million.

The budget hits jobs:

The biennial budget will implement over $760 million in tax increases on CT employers including implementing a unitary tax, continuing the corporation tax surcharge, modifying the utilization of business tax credits, and changing the utilization of loss carryforwards. As a result, major CT employers have announced their intention to look outside of the state.

  • Stanley Black & Decker had this to say about the state budget:

“These changes will make it difficult if not impossible for our leadership to responsibly undertake any growth or expansion opportunities within the State of Connecticut, and may further force us to consider relocating our headquarters to another state.”

General Electric, which employs 6,300, said this:
“Retroactively raising taxes again on Connecticut’s residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state.”

And this:

“As a result of this law passing, I have assembled an exploratory team to look into the company’s options to relocate corporate HQ to another state with a more pro-business environment.”

  • Boehringer Ingelheim Pharmaceuticals, Inc. employs more than 47,000 worldwide said this:

“Implementing the current, short-sighted tax proposals will stifle innovation, especially research and development of critical medicines, and have far-reaching implications on our ability to plan and make long-term business decisions. The current proposal will undermine the financial feasibility of continued capital investments at our Ridgefield/Danbury site.”

  • Aetna, which employs 7,450, had this to say:

“Connecticut is in danger of damaging its economic future by failing to address its budget obligation in a responsible way. Such action will result in Aetna looking to reconsider the viability of continuing major operations in the state.”

  • Travelers, which employs 6,200 people, said the following:

“Raising taxes again will increase the cost of living for nearly every resident and small business in the state, negatively impacting our employees and customers.”