Remember when the income tax was supposed to stop extra sessions, budget shortfalls and be better barometers of what the General Assembly could and should spend? We do. When then-Gov. Lowell Weicker broke a campaign promise and brokered a deal for an income tax – the first in the state’s history – the ostensible reason was supposed to be fiscal stability, and a better way to assess the state’s fiscal health.
Those of us old enough to remember the era before 1991 recall the battles over spending, and how the state never seemed to have enough money. We further recall how the various levies and fees were to be reduced in order to accommodate an income tax.
Yet, here we are a quarter-century later, and the state income tax has not helped our fiscal health. It has not brought down fees and it has not given legislators and the governor a better way gauge revenues. In fact, in the 26 years since the tax was enacted, the very thing critics and opponents said would happen, has continued and continues still.
Along with the income tax, the idea of a two-year budget came about as a way to deflect the critics of the income tax. A two-year spending plan, along with a spending cap not to exceed the average increase of taxpayers’ income over a five-year period, was supposed to make the income tax more palatable.
The two-year plan has not in any way curbed spending, and a loophole in the spending cap law gives the legislature the ability to bypass it – something it has done every budget cycle since it was enacted. In fact, three years ago, the spending cap was declared null by the Attorney General specifically because it was not ever invoked. So, even that bit of legislative sleight of hand was taken from the state’s hard-working taxpayers.
Connecticut’s problems are not one of revenue. Those problems arise because of profligate spending and double-digit increases in that spending by the General Assembly and encouraged by the executive branch. In the years after the income tax was enacted Connecticut’s spending rose each year by double digits.
Instead of giving the legislature and the executive discipline, it has served as a means of having more funds to spend. Each year fees and other taxes are increased along with the income tax to cover these expenses. Now we find ourselves in another budget crisis.
We are now in the midst of the second full week in July. The General Assembly is in special session trying to come up with a budget that will cover state expenses, while filling a well of red ink to the tune of more than $5 billion. The session reminds one of the battles so common in the era before the income tax and the assurances we were given that fiscal discipline would be the order of the day once everyone paid their “fair share.”
Connecticut, once a bustling state with manufacturing and white-collar jobs, was a destination state for many decades. That came to an abrupt halt in the 1980s as our manufacturing base became too expensive to maintain here. Part of that problem was profligate spending.
Connecticut in the second decade of the 21st Century refuses to see that its residents cannot maintain the spending of a bygone era. Manufacturing is gone, and now the white-collar jobs that are the basis of so much of our economy seem to be leaving as well. Aetna’s decision to move its corporate headquarters is as much a verdict on the state’s viability as anything else.
Gov. Dannell Malloy and the General Assembly seek to fill spending gaps and hope to get by another budget cycle with a patchwork of give-backs and reapportioned spending. We are told the negotiations are “revenue neutral,” meaning no new taxes are contemplated. But we have no reason to believe our leaders.
For too long they have ignored the structural problems in our spending that have given us not only a $5 billion deficit, but another $100 million in unfunded liabilities. We expect that new taxes will be part of the deal or at least, new fees, believing no one thinks those are taxes.
People are leaving the state by the thousands, and spending continues. It just proves the old bromide: The more the politicians have, the more they spend.