The Finance and Appropriations Committees deadlines have passed, and it’s now time to begin negotiations with the Governor’s office. In February, the Governor proposed a no tax increase budget by calling for spending cuts and some consolidations. On April 2, as deficit projections grew, the majority party proposed their budget with 3.3 billion in tax increases to close the gap. On April 16, the House and Senate Republicans incorporated ideas from both the Governor’s and Democrat’s budgets and proposed a no tax increase budget that provides an additional $1 billion dollar reduction in spending.
Given the continued revenue decline, I believe it is imperative to not raise taxes on families and businesses. Preliminary analysis of Connecticut’s tax returns as of April 15 is painting a bleaker picture for 2009. The State projected a 36% decline in personal income tax revenues for 2009. Returns, however, are demonstrating a potential reduction of 50%. 2009 has turned out to be much worse than imagined. When we began the fiscal year in July, deficit projections began around 80 million. Nine months later, projections are spelling out a potential $2 billion deficit.
Our budget proposal builds on the ideas of the Governor and Democrats. In addition to the reductions they offer, we propose a greater utilization of our community providers, privatization of certain government services and consolidation of state agencies. Connecticut is one of only four states with a dual system of providing social services using state and private provider systems. We must eliminate unnecessary duplication and shift a greater number of these services to the private sector. We propose consolidating our business agencies, including CT Innovations, Community Development Authority, and CHFA into the Department of Community and Economic Development; our health agencies including DPH, DCF, DDS, DMHAS and DSS into the Department of Human Services; and our public safety including Dept. of Emergency Management and Homeland Security into the Department of Public Safety. Finally, we call for a review of our state assets, including our six airports and mortgage assets, for the purpose of outsourcing or selling these items in order to reduce government’s size and raise revenue.
We call for an Early Retirement Incentive Package for state employees and employee concessions which include an 18 month wage freeze, 6 furlough days per employee per year and changes in medical co-pays from $3 to $10 for generic drug prescriptions, $6 to $20 for name brand drugs prescriptions, and $10 to $20 for doctors’ visits. Finally, we propose creating a third tier for future state hires which would include greater concessions in items, such as pension contributions, in order to address our unfunded liabilities in our pension and post-retirement health care plan.
Our proposal restores the proposed cuts to municipal aide. Any reduction in aid to cities and towns translates to an immediate real property tax increase to residents; therefore, these reductions don’t save anything. It merely shifts the burden to our already stressed real property tax system. This is why we also restore the cut to the real property tax credit. This credit is a vital form of tax relief by providing up to $500 of tax credits per family to offset their income tax liability.
We have a long way to go in this budget process, and as I’ve said before, time is not on our side. I believe it was important that the minority party provide a third alternative to these discussions. There is a better way to balance Connecticut’s budget and that way is without tax increases.