Connecticut's budget is settled (maybe) / State Rep. John Hetherington
Published 7:55 pm, Tuesday, May 17, 2011
The 2011 regular session of the Connecticut General Assembly ends on June 8. Thereafter, special sessions and committee work loom likely, but the convening of the legislature mandated each year by the constitution will be over.
In the past few weeks, Connecticut adopted a budget for the biennial 2012-2013. It totals $40 billion for the two years. As passed, the budget had a $2 billion hole the governor planned to fill with state employee concessions. Reportedly, he has about three quarters of the amount needed in concessions and has a plan to find the rest in other ways. The worry is in the ways.
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Regardless of union concessions, we do know that there are nearly $4 billion in taxpayer concessions. There is a boost in the income tax, the sales tax, the corporation tax-surcharge, and the estate tax since the exemption drops from $3.5 million to $2 million. Individuals, or their surviving kin, should note that the income and estate tax revisions are retroactive to Jan. 1, 2011. All in all, we will see the biggest tax increase in Connecticut's history, rivaled only by the boost we saw in 1991 when our income tax was put in place. Now, as then, more spending will follow. We actually will spend more in 2012 and 2013 than in preceding years.
It is fair to expect that the state's work force, now reported at almost 55,000, will continue to grow. During the budget debate, there was a revealing moment in a colloquy on reducing the size of government. The chairman of the Appropriations Committee argued that there is no difference between jobs eliminated in government and jobs lost in the private sector. Lost jobs are lost jobs. It is all the same whether they vanish in one "industry" or another. Many of us would disagree, insisting that government is not an industry. It creates no wealth. It pays no taxes. On the contrary, government is a consumer of taxes and sustains itself on the wealth created by jobs in the private sector. Given such a fundamental difference in the way we see the world, it is no surprise that legislators are sharply split on taxes and spending.
Assuming improving revenues, the governor expects a $1 billion surplus over 2012/2013. If that holds true, his challenge will be to hang on to it. Already, the spenders are gathering, preparing to roll out the barrel.
Gov. Malloy took on a tough job. He deserves credit for proposing an honest budget to solve the $3.5-plus billion deficit we face in each of the next two years. But we squandered a real chance for change and instead solve the problems in the same old way -- higher taxes and more spending. Moreover, we still do nothing to address more than $50 billion in unfunded pension and health-care costs, spread into the future the costs of adopting GAAP accounting, and still leave the people of Connecticut with the highest per capita government debt in the country. We should have done better.