Letter from Hartford- State Budget Wrap-up

The good news is that we have a budget. Unfortunately, that is also the bad news. The bad news is that, over the two year biennium, this budget increases taxes by a net $950 million, increases fees by $206 million, and depends on about $2.5 billion in new borrowing. Almost $1 billion of that borrowing is needed just to close the deficit for the last fiscal year. The budget faced unanimous Republican opposition and opposition from several Democrats. From our area, William Tong, a Democrat who shares New Canaan with me as well as representing North Stamford, showed independence and voted No. The income tax hike is targeted at couples earning over $1 million and singles with an income over $500,000. They contribute heavily to our economy and already pay the largest share of the income tax revenue. We can hope more do not join the exodus. Numerous fee increases will impact everyone from lawyers to nurses, and citizens at every income level. We don’t call these taxes, but we cannot pretend they are not. Large corporations will pay a 10% surcharge on their taxes. These companies may seem remote, until they have to cut more jobs in our communities. The worst news though is not about the details of the new taxes and charges. The worst news is that we did not have to impose them at all during these difficult times.
Sadly we have missed a rare opportunity to put our state on a sound financial footing. Over the past 15 years state spending has doubled. This year we had a chance to break the trend. But the budget as finally adopted actually continues to increase spending. The Republican minority in the legislature proposed an alternative budget, with no tax increase and a return generally to spending levels of just two years. In addition, the alternative budget removed the unfunded state mandate that requires our schools to provide in-school suspension for students who are suspended. This mandate is simply an unnecessary burden on property owners in Wilton and New Canaan. The alternative budget failed on a strict party line vote.
 
Perhaps the most positive feature of the 2009-2010 budget is that the threshold for a taxable estate will go up to $3.5 million, with the elimination of the so-called cliff effect. The cliff effect causes an estate to be taxed from the first dollar once the threshold is crossed. Governor Rell first put the issue on the table with a proposal to eliminate the estate tax entirely.
 
In a particularly disappointing finale, the majority amended the budget to add a series of earmarks costing $26 million over two years. Beneficiaries include specific local organizations like the Central YMCA in New Haven, the Valley Shore YMCA in Westbrook, and the Willow Plaza Neighborhood Revitalization Zone Association in Waterbury. These are presumably all good causes, although neither Wilton nor New Canaan
made the favored list. But it shows an acute deafness to public outrage, especially in a stressed economy, for legislators to ladle
out pork to preferred districts.
 
The Democrats have overwhelming control of both houses, so they have sole ownership of this budget. It is not bipartisan and it is not a compromise, unless there was a compromise within the Democrat caucus. We do not get the best result when one party – either party – so completely dominates the legislature. Perhaps the voters will decide to change that.