I came to the State Capitol on Feb. 6 to listen to Gov. Malloy’s budget address, which is his plan for the next two years. While I know the governor is trying to do what he thinks is right, I believe we need to take a different approach to the fiscal cliff we are facing than what the governor is proposing.
To begin the conversation, let me first give you the latest figures: the state is facing a $2.5 billion budget deficit over the next two years, and the governor proposes to increase spending by 9.7% or $1.8 billion over the current budget and bonding $3.1 billion for the biennium. This does not even address the current $140 million deficit for this fiscal year which ends June 30.
Essentially, the governor’s budget continues to spend money the state does not have while revenues decrease as taxes increase.
I respectfully disagree with the governor’s assertion that towns and cities are held harmless in his budget. Although every municipality is flat-funded by the state, one of their largest income streams, the municipal car tax, is taken away and not replaced with any funding — that’s $500 million that gets taken away. The towns I represent, New Canaan and Wilton, will lose a significant amount of funding in this situation. While I support virtually any proposal that lowers our tax burden, I believe we have to be clear about what is being done. New Canaan and Wilton, not the state, will have to cut spending for there to be no additional property tax burden on residents.
Regarding other taxes, the governor’s plan is letting a number of existing tax cuts which were sun-setting expire. As a result, that’s a new tax people were not planning on paying. For example, businesses that were counting on the promised phasing out of the $116 million corporation tax now find themselves in the position of having less money to hire people or invest in infrastructure.
Gov. Malloy’s budget pays for the massive increase in spending by borrowing and bonding an additional $3.1 billion over two years. Remember, bonding the money means we borrow the money with interest.
The governor is increasing borrowing to an unprecedented level, mortgaging the future of the next generation of Connecticut residents, and jeopardizing our bond rating even further — a bond rating that has already been downgraded once within the last 18 months.
The most troubling aspect of the proposal is the massive borrowing to finance operating expenses such as employee salaries and other day-to-day costs that should be included in the general fund.
I came to Hartford last year on the platform to make Connecticut a better place to live and retire. Unfortunately, this budget does nothing to curb the roughly $49,000 per taxpayer debt which is the worst in the country. Connecticut’s current unfunded debt liability stands at $63.9 billion, which includes the State Employee Pension unfunded at $11 billion and the Teachers’ Pension unfunded at $11.1 billion.
At a time when we are competing to keep and bring in retirees and America’s best and brightest workers and entrepreneurs, we need to reduce our debt, not increase it. As a person contemplating where to retire or work and start a family, where would you look? At a state ranked at or near the bottom in many different categories including debt and taxation? Indeed, by its operation, the “First Five Program” acknowledges that our taxes and other burdens on businesses are far too great, and thus concedes that without tax breaks, companies would not come to Connecticut. Such a program alienates businesses that have been here and played by the rules for years. We should lower taxes and regulations on all businesses and individuals, including retirees. Such a policy will bring in more revenue, not less.
Now the legislature gets our chance to have public hearings on this proposal and to craft our own budget over the next couple months. It is my hope that we will reduce spending and not only eliminate the need for further borrowing but actually start paying down the massive debt that has been created over the last budgets.
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Mr. O’Dea represents the portion of Wilton in the 125th District.