Tax Day: How’s the State’s Fiscal Foundation?
Today is Tax Day, April 15, the deadline for most Connecticut taxpayers to reconcile with state government and Uncle Sam over what they earned, what they paid in taxes, and how much they might owe.
Over the next several weeks as tax returns come in, state policymakers will be watching very closely to see how this year’s state budget stacks up against actual revenues.
This year’s budget is anywhere from $19 billion to $22 billion, depending on how you account for all of the spending (traditionally including Medicaid spending, or omitting it per changes lawmakers made last year).
Officials are projecting a $500 million surplus for fiscal year 2014 before deep budget deficits are expected to return for the next several years. Three years ago, the legislature passed the biggest tax hike in the state’s history.
As Brian O’Shaughnessy writes for CT News Junkie, we need to be aware of the big issues at play—such as the basics behind the state’s balance sheet and the value taxpayers are getting for their tax dollars.
This year’s surplus notwithstanding, he notes, state spending in Connecticut has been outpacing revenues. It’s a kind of fiscal tectonic shift as our means decrease and needs increase.
If we can’t stop that shift from happening, then our fiscal foundation, and our most vulnerable people, could be at risk. And if we’re not getting the best value in return for our tax dollars, then it’s double jeopardy.
Much is at stake, says Shaughnessy:
“If the manner in which we deliver public services crashes, the human results will be devastating. Our public investments are purported to improve our society and living conditions. If these are proven to be an illusion, look out for education, the quality of our workforce, economic mobility, and true public safety for all. If these do not exist, what do we have?”
A state’s fiscal health plays a big role in the health of its economy, and Connecticut has ranked below the middle of the pack in some U.S. rankings of economic competitiveness, and close to the bottom in others. The state’s fiscal instability has worked against business confidence and discouraged job creation and greater investments in the state.
We’ve often said that the state is spending beyond the ability of taxpayers to afford it. And what’s more, we’re not exactly sure how effectively those tax dollars are being spent.
Our agenda for 2014 includes some very doable steps to help answer that question:
- Expand lean practices to all state government
- Implement the results of the governor’s regulatory initiative
- Conduct a nonpartisan comparison study of pay and benefits practices in the public and private sectors
- Adopt recommendations of the Connecticut Institute for the 21st Century, MORE Commission, and others to control costs and improve services
In the next three weeks, lawmakers will be adopting budget revisions for this fiscal year. With more budget deficits on the horizon, belt-tightening and government-leaning would seem to be the most appropriate courses of action.
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