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Budget Debate: It’s Not How Much, But What Kind Of Revenue To Raise
HARTFORD: For months Gov. Dannel P. Malloy has been sparring with his fellow Democrats in the House of Representatives over how much new tax and fee revenue should be raised to support the next state budget.
But while the debate has been characterized as one of raising revenue versus cutting spending, the real debate is over what form that added revenue should take.
In fact, the size of the state tax and fee hikes the governor has proposed falls fairly close to those offered by House Democrats.
So if the level of overall new taxes isn’t the issue, what is?
Connecticut’s top state senator said Wednesday he believes moderate Democrats are “growing increasingly comfortable” with a sales tax increase that could ease pressure to slash municipal aid and help break an impasse that has left the state without a budget.
“They’re growing increasingly comfortable recognizing it as an inevitability, I think,” Senate President Pro Tem Martin M. Looney, D-New Haven, said of an increase in the 6.35 percent sales tax.
Gov. Dannel P. Malloy reacted cautiously to the prospect of a sales tax increase, which would be only one element of a budget solution. He indicated he was more interested in hearing what combination of other revenue and spending cuts legislators intend to pursue.
“This should not be a discussion led on revenue,” Malloy said. “This is a discussion about making hard choices, and if people are ready to make hard choices — if and when they’re ready — we’re going to get a budget. And if not, it s going to be more difficult.”
He said he would veto any budget that leaned too heavily on new revenue.
Despite Looney’s view of the inevitability of a sales tax increase, three of those moderates, Sens. Joan Hartley, D-Waterbury; Paul Doyle, D-Wethersfield; and Gayle Slossberg, D-Milford, warned there was not yet a consensus that could deliver a budget for the fiscal year that began July 1. With huge municipal grant payments hanging in political limbo, House Democrats announced plans this week to hold a budget vote between Sept. 11 and 14.
House Speaker Joe Aresimowicz, D-Berlin, said he believes there is sufficient support to pass his caucus’s proposal for a new two-year budget. That plan relies on boosting the sales tax rate, though Aresimowicz said probably not as high as the 6.99 percent previously discussed, and on surcharges on restaurant and hotel transactions — to avert deep cuts and other burdens Malloy proposed for cities and towns.
The governor wants communities to pay $400 million per year to the state to help cover contributions to the teachers’ pension fund, though his administration has expressed a willingness to compromise. He also would subject nonprofit hospitals to municipal taxation, which would generate $210 million annually. But that revenue gain to towns largely would be offset by reductions Malloy proposed in various municipal grant programs.
House Democrats proposed the sales tax hike and surcharges largely to mitigate these measures.
Looney and Aresimowicz hedged on the question of how high a sales tax might be accepted by moderate Democrats in the Senate. Without offering examples, Looney said legislators were exploring expanding the base of products and services subject to the tax.
“That’s a question that remains to be answered,” he said. “We’re continuing to talk. We’re going to have another caucus next week. I think at the end of the process it will have to be part of the final budget in some way in order for us to get a budget.”
But Hartley said, “I am not growing more comfortable with the sales tax.”
Hartley, Slossberg and Doyle joined last month in proposing a series of long-range fiscal reforms centered on the state’s huge bonded debt and massive unfunded retirement benefit obligations.
The three senators agreed to support a union concessions plan that also extended the state employee unions’ benefits program from 2022 to 2027 in exchange for a pledge to make a best effort to include those reforms in the new state budget.
“The first and foremost question is the adoption of the reform plan that was put out there,” Hartley said. “Before we get to anything (else), that is pivotal.”
Some of the reforms sought by the trio would restrict in statute benefits the state could offer in future contracts. Others would end automatic cost-of-living adjustments to pensions, remove overtime earnings from pensions calculations, and restrict future benefits contracts with state employee unions to no more than four years in duration.
The moderates also would peg contract arbitration awards to the state’s ability to pay increased wages and benefits and create a commission to develop a sustainability plan for the pension fund for municipal teachers.
“We have to address the legacy issues, the long-term problems and systemic issues that have plagued us and will continue to plague us in the future unless we begin this work immediately,” Hartley added.
“I was surprised by that comment (from Looney) because we are still in caucus discussions regarding the overall budget,” Doyle said. “I still have overall concerns with any broad-based increase in the sales tax. I am hearing much opposition from my constituents to that.”
“I am no warmer to a major sales tax increase than I was when it was first proposed,” Slossberg said. “We need systemic reforms and a sustainable budget that will get us out of permanent fiscal crisis. And I don’t think a major sales tax increase is going to do that.”
Democrats hold a narrow 79-72 edge in the House, and the 36-member Senate is split evenly along partisan lines.
Republicans already have expressed opposition to the sales tax increase and are expected to oppose the House Democratic plan.
To have any chance of passing in the Senate, it would require support from all 18 Democratic senators and also from Democratic Lt. Gov. Nancy Wyman. As Senate president, she can cast a tie-breaking 37th vote.
Economic Development Specialist, Wallingford EDC.
By Tim Ryan
Economic Development Specialist, Wallingford EDC.
WALLINGFORD: Let’s be real. When any of us as consumers or business people have to interact with a governmental agency, our expectations for courteous, timely, and effective service don’t likely rank high on the customer satisfaction meter. And frankly, we deserve to have a reasonable expectation of a good experience. As municipal employees we work for the taxpayers…we work for the mutual benefit of our communities. Well, In Wallingford we’re driven to provide a good experience when you engage our Economic Development office. And, it’s certainly not breaking news that successful businesses are a critical component to a community’s fiscal well-being and that a good customer experience leads to a good reputation which leads to an increase in the number of local businesses. Ah…fundamentals!
We’re confident that if you were to ask: Innovative Engineering Services (IES) who purchased a new building and added over 40 new jobs; or Davenport Associates who built a new office warehouse facility; or Edible Arrangements who expanded their world headquarters; or GKN Aerospace who are fitting up their new facility adding over 80 new jobs; or Harte Infiniti whose new auto dealership added over 35 new jobs; or Hobson Motzer who purchased and fit up a new facility adding over 50 new jobs, what their experience was in dealing with our Economic Development office we’re confident their comments would be positive. Now that’s not to say there weren’t wrinkles that needed to be ironed out as part of the process…there always seem to be…but we worked through them and all of these companies have brought new economic growth to Wallingford.
Connecticut Conference of Municipalities Executive Director Joe DeLong
[Photo: KEITH M. PHANEUF]
NEW HAVEN: One of the leading municipal advocates says the House Democrats’ plan to boost the sales tax to aid cities and towns is flawed.
And Connecticut Conference of Municipalities Executive Director Joe DeLong also says he believes municipal leaders — who pitched a sales tax hike as part of their own local assistance plan back in January — would urge legislators to vote against the House Democratic option.
|House Speaker Joe Aresimowicz, left, and House Majority Leader Matt Ritter keeping sales tax increase on the table.|
Sales Tax Hike Remains In Play As CT Budget Talks Drag On
Hartford: As legislators struggle to find enough spending cuts to offset a major projected deficit, House Democrats continue to talk about increasing one of the state’s two major taxes — the sales levy.
But while House Democratic leaders acknowledged Thursday that hiking the sales tax rate to 6.99 percent was discussed in a closed-door meeting of caucus members, they also said this would only be considered to mitigate deep and painful cuts proposed for municipal aid.
New Haven Magazine