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Tax Cuts: Now You
See Them...
‘Shaky' state budget may render income-, business-tax cuts illusory, report says
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Business New Haven
9/11/1995
By: BNH
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Although not the zero-growth budget championed by Gov. John G. Rowland, the state's fiscal 1996-97 budget is the most effective in recent memory at shrinking government. Nevertheless, the many gimmicks used to more or less balance the spending plan may place the projected $200 million 1997 tax cut in jeopardy.
That's according to the Connecticut Policy and Economic Council (CPEC), which has released its guide to the biennial state budget. That budget, CPEC notes, is “balanced” by extending deficit reduction fund (ERF) payments an additional three years, delaying GAAP (generally accepted accounting procedures) budgeting for two years, diverting hospital taxes from uncompensated care to general programs, delaying several business tax cuts until the next biennium, hiking the estimates of Indian gaming contributions, underestimating personal and corporate tax refunds and selling off the state's lottery to a private contractor. The latter is intended to finance the fiscal 1997 income tax cuts.
So while the good news is that budgeted state spending growth is “only” $750 million (on a two-year base of almost $20 billion), the bad news is that “There is a good chance the income-tax cuts will not take place as scheduled given the shaky financing behind them,” says CPEC President John J. Carson. “If they do occur in fiscal 1997 it will be because other taxes or state revenues are raised to compensate for the lost income tax revenue.”
A number of business tax cuts or credits are being delayed to save $48 million in revenues during the budget's two-year life. They include the sales tax phase-out on computer and data-processing equipment, the corporation tax credit for machinery and equipment purchases by smaller businesses, a new sales-tax exemption for tax-preparation services, repeal of the water companies and tire taxes, and the data-processing property tax credit on insurance premiums or public service companies taxes.
“The unfortunate aspect of the backsliding on sound budgeting this year is that it obscures the very real progress made on reining in state spending growth,” Carson says. “With the major exception of meaningful changes to the collective bargaining system for state employees, the 1995-97 budget breaks new ground in reforming state and local welfare programs, curbing costs for Medicaid and corrections, permanently shrinking the state workforce and reducing capital authorizations.”
Budgeted state spending is $9.726 billion in fiscal 1996 for the general, transportation and Pequot funds, and $10.080 billion the following year (see related chart, page 35).
Are You Ready for Some Football? Guess Not
DeStefano's hardball dooms CFL pigskin bid
Although late Yale football coach Walter Camp may be the “father of American football,” New Haven Mayor John DeStefano Jr. is not about to become the favorite uncle of Canadian football in America.
That's because the Elm City's chief executive apparently put the kibosh on a bid by Greenwich businessman to bring a Canadian Football League Franchise to Connecticut. After a reported eight months of negotiation, William R. Berkley gave up on efforts to establish a CFL franchise to the Nutmeg State after failing to reach agreement with DeStefano on the length of the team's tenure in New Haven.
Berkley sought temporary tenancy in a refurbished Yale Bowl while a $250 million permanent stadium was being built in Hartford. The latter facility would also serve as a home to an upgraded University of Connecticut football team, which needs a stadium capacity of at least 30,000 to move from Division I-AA to I-A. Berkley said that securing a stadium for an expanded UConn pigskin program was his principal motivation in seeking a CFL club.
In 1993, legislation was passed for a 70,000-seat stadium to lure the NFL's New England Patriots to Hartford from their aging venue in Foxborough, Mass. When Patriots owner Robert Kraft demurred, a CFL tenant became Plan B for the proposed facility.
Improvements allowing the 70,000-seat Yale Bowl to accommodate the CFL team would have cost some $25 million. Over the course of negotiations, however, DeStefano made it clear that, unless New Haven was to be the team's permanent home, he would not support the bid. “Why would you spend $250 million for what you could have in New Haven for $25 million?” he told a reporter.
“[DeStefano] refused to discuss the issue unless and until New Haven was designated as the home of a future stadium,” as Randy Spector, an attorney for Berkley, told the press.
Berkley's bid (and his $100,000 deposit to the CFL) having been forsaken, UConn's football prospects will for the foreseeable future remain in the second tier. And, etched against a grey October sky, Yale Bowl will continue to host 8,000 for the Brown game.
Pushing the Right Buttons
Local firm teams with 'special' workers for World Games promo
The 1995 Special Olympics are gone but not forgotten, thanks to some unforgettable special athletes - and thousands of souvenirs.
Instant Buttons Inc. of Hamden, a button machine and button components manufacturer that promotes employment for persons with mental retardation, wanted to give World Games participants and event attendees a little something to take home with them - handmade buttons, in the same spirit as the pins so voraciously traded at the Summer and Winter Olympic Games.
The Connecticut Masons underwrote a booth in Olympic Town, which was open exclusively to the 8,000 or so Special Olympics athletes and their families and guests, and Instant Buttons' owner, Jack Alpert, donated enough supplies to make 21,000 buttons.
Instant Buttons doesn't make finished buttons; it makes the metal components for buttons. So, in another joint effort, students from New Haven public schools designed outlines on paper that athletes who visited the booth colored in with markers of their choice.
In addition to the 21,000 buttons Alpert donated for athletes to make, the new Special Olympics Sibling Committee, sponsored by Friends of the Children's Hospital at Yale-New Haven Hospital, purchased supplies from Instant Buttons for 2,400 buttons and employed Benhaven to produce them.
Until recently, Benhaven functioned as a “sheltered workshop” for adults with mental retardation. Times, attitudes and new information have shed light on the disadvantages of sheltered workshops, and Benhaven has evolved toward promoting the inclusion of employees with mental retardation into jobs in the community. There, employees can seek out environments that are healthier and jobs that can be more interesting.
Alpert has a special place in his heart for people with mental retardation and physical handicaps: His (now deceased) older brother was mentally retarded. Alpert helped his sibling sell newspapers, and he knows that working helped to elevate his brother's self-esteem and sense of independence.
Although none of Alpert's seven employees is mentally retarded, the company has worked with workshops over the years training employees to make buttons and contracted them to assemble buttons.
Alpert pays employees by the piece, rather than by the hour, to assemble buttons. For example, an employee who puts together 10,000 pieces will earn $69. Instant Buttons is a million-dollar business, and between 20 percent and 25 percent of its revenues derive from selling components and machines to workshops.
By the conclusion of the Special Olympics, more than 23,000 athletes and their families were sporting the hand-made buttons. They were winners, all right: One proud owner wore his all the way back to Kenya and dropped Alpert a thank-you note. And as for the future, a representative from the 1996 Winter Special Olympics invited Instant Buttons to come to the games in Canada.
Done Deal?
Talks continue after Fleet promises to
divest branches post-Shawmut merger
Is the state merely caving in to the proposed merger of Fleet Financial Group Inc. and Shawmut National Corp.?
Some officials in the Rowland administration expressed satisfaction with the banks' proposal, announced late last month, to sell 28 branches throughout the state. Attorney General Richard Blumenthal said the plan “promises to be fair and beneficial to Connecticut” after reviewing the branches slated for sale.
“Much of this divestiture will be done as a package of branches sold to one bank,” Blumenthal said, “so as to help ensure that it will emerge as a strong competitor. The banking operation buying these branches instantly becomes a pre-eminent participant in Connecticut banking.”
While his use of the word “pre-eminent” maybe unfortunate, Blumenthal soon thereafter sought to ensure that the Providence, R.I.-based Fleet would come up with a guarantee to help the state with job growth, participate in the financing of affordable housing and investments in neighborhoods.
In meetings state officials held with the Federal Reserve Board, Blumenthal said, “Since Fleet, post-merger, would be Connecticut's
largest bank, surely it recognizes that its own success is largely linked to the success of Connecticut's economy.”
For that reason, Blumenthal said he sought “to ensure that the new Fleet is a significant source of loans and investments for Connecticut's small and medium-sized businesses and Connecticut's affordable housing
and neighborhood infrastructure programs.”
That's a lofty aim, considering present performance: For instance, from October 1, 1994 to July 31 of this year, Fleet wrote six loans, representing $960,000, to small businesses under programs guaranteed by the U.S. Small Business Administration. The tiny First National Bank of New England, based in Hartford, wrote 81 loans totaling nearly $39 million.
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