Taxpayers' concerns + soaring tax revenues should = no tax increases

Insert graphic here:
width: 175px
height: 64px

Taxpayers’ concerns + soaring tax revenues should = no tax increases

But some legislators still want to raise taxes, spending

Taxes and the economy are Connecticut’s top problems, according to a new poll of state residents. That news, announced in May, came at the same time two separate estimates said soaring state tax revenues will result in a higher-than-expected surplus this year. Consequently, Gov. Rell said she no longer thought a tax increase will be needed to pay for her budget.

Yet, as of press time, some state legislators still wanted to raise taxes to pay for big spending increases.

The legislature’s Office of Fiscal Analysis (OFA) in early May projected a state budget surplus of $846.8 million for this fiscal year, which ends June 30. What’s more, OFA said the state’s current tax structure will produce considerably more revenue over the next two years than originally expected. Also in May, the state comptroller’s office issued a new estimate of a more modest but still substantial surplus of $627.3 million this fiscal year. Both offices said greater-than-expected revenue from the personal and corporate income taxes helped boost the surplus estimates.

Gov. Rell said the higher surplus would enable lawmakers to adopt her budget proposal with very little or no tax increase. In February she had proposed a $35.8 billion, two-year state budget that included a $3.4 billion, five-year education reform package and income tax increases to pay for the education initiatives.

Meanwhile, the latest Quinnipiac University poll shows that concerns about taxes in Connecticut are the highest in more than a year and fully 10% higher than in January 2006. Surveyed residents said the state’s most important problems are:

Taxes — 29%

Economy — 22%

Health care — 8%

Education — 8%

Energy — 5%

Transportation — 4%

News about the Quinnipiac poll and the state surplus came just as budget negotiations at the State Capitol were picking up steam. Budget and revenue packages (HB-7077 and SB-1390) approved by the Appropriations and Finance committees and supported by majority Democrats, however, would raise spending and taxes by nearly a billion dollars.

A Republican budget proposal also exceeds the state spending cap, but not by as much as the other budgets. And the plan does not call for tax increases.

CBIA agrees that Connecticut needs to address major challenges such as education, health care and affordable housing, but it must do so in a responsible and affordable manner. Taxpayers expect state government to use their tax dollars as responsibly and effectively as possible. Policy-makers need to avoid repeating the mistake the state made in the past, when it increased spending during a strong economy and then wound up with huge deficits when the economy inevitably slowed.

CBIA is urging lawmakers to adopt a budget that is affordable and avoids new taxes that could hurt Connecticut’s economy. For updates on the status of state spending and tax bills, visit cbia.com/gov.