House Republican Press Release

 

 

 

January 1, 2009

Press Office: 860-240-8700

 

                         THE NEW SESSION IN HARTFORD

                                   

 

By John W. Hetherington, State Representative, 125th District

 

By the time you read this the Connecticut General Assembly will have convened on January 7 for its 2009 regular session. This is the year in which we set the state budget for the next two years. These years present a combined deficit projected at over $3 billion. Before that, though, we will have to deal with a deficit of $350 million for this fiscal year which ends June 30, 2009.

 

We didn’t get here overnight. In 1991, when Connecticut first adopted an income tax, our annual spending was at $4 billion. Now it is at $18 billion. The income tax has become the largest source of revenue, 45% of which comes from Fairfield County. Clearly Fairfield County has been counted on to fuel the spending rocket.

 

Having rejected the Governor’s efforts to address the fiscal crisis in special session over the past six months, we can’t duck it any longer. Since we are required to produce a balanced budget, there are really only three options: 1. Reduce spending, 2. Raise taxes, 3. Call Uncle Sam.

 

To reduce spending is a real challenge, just by the make-up our budget. Personnel costs, debt service and entitlements together amount to half our expenses. So any reductions are limited to the rest of the budget. Included there are programs that meet real needs and on which many people depend. There are also expenses that have a political constituency, but that can be safely deferred. There are going to be tough choices and a need for political courage.  This session I am taking a seat on the Appropriations Committee. I don’t look forward to more all-nighters in Hartford, but I am excited to be at a key point in finding solutions. Spending is where our trouble began. Spending is where solutions have to be found

 

There is little enthusiasm for raising taxes, even among those who usually warm to the idea. Income tax revenues are currently reported to be down 12% while sales tax returns have slumped 16% .To increase the sales tax would certainly delay recovery and increase a regressive tax on people who already can’t afford their purchases. The total income tax take comes mostly from people at the upper income levels. But there are fewer people at those levels, so the income tax would have to raise more money from a smaller base. The 12% decline in income tax revenues would need to be overcome just to bring us back to where we were. So to find a broad solution in the income tax would require a very major boost in the tax and its extension to more modest income levels. Some see an opportunity to increase the gasoline tax since gas prices have fallen. But the feds may have an eye on the same thing and gas prices are not likely to remain low forever.

 

Finally, there is a persistent hope that Washington will come through for us. Indeed, a large stimulus package seems likely and in fact we have suggested a number of local ”shovel-ready” projects to be put in Connecticut’s stocking.  Certainly, funding projects in Connecticut will create jobs for people who will pay taxes, and purchase goods and services. But that is likely to be a more extended result. This aid will not take care of any budgetary problem that we face immediately. Connecticut can’t expect to just get a big check right now from DC. Hey, we’re not GM.