Senate Circle: Connecticut's fiscal cliff
We had much to be grateful for this Thanksgiving. The power is back on, the elections are over and the public is reaching out to those who need help recovering from recent storms. Through all the disruptions, I found the best aspects of human nature on display throughout our region. Neighbors came to the rescue of their neighbors and strangers came off the streets to man phones and comfort storm victims at local emergency call centers.
It is also a good time to reflect on our ever changing and volatile world. With continuing turmoil in investment markets, and Europe swimming in red ink, world events have created a deep sense of insecurity.
Some would like a return to a more calm and predictable time but that is not the reality we are facing. Our residents have already endured the biggest retroactive tax increase in state history, with a promise that another tax increase would not be forthcoming.
The next legislative session will be daunting as Connecticut faces the stark reality of its own looming fiscal cliff. The situation is so dire that a special session is now being planned before the new year. Most are convinced that the current state deficit of $365 million and projected deficits of $1 billion a year for the next three fiscal years cannot be solved with another tax increase. Connecticut now ranks last among 50 states in credit analysis.
Connecticut’s unemployment rate has also risen again to 9% compared to 7.9% for the nation and 7.1% for New England. Over the past year, Connecticut lost 2,800 jobs. Instead of more $100 million corporate giveaways, we should consider the latest research that links poverty reduction with entrepreneurship. Its author, Stephen Slivinski, calls for policy makers to put a priority on promoting entrepreneurial growth and suggests lowering tax burdens as a catalyst for job creation. Mr. Slivinski cites that “for every 1 percentage point increase in the tax burden, there’s a corresponding 1 percentage point drop in the entrepreneurship rate.” (Source: Kaufman Foundation for Entrepreneurship)
Historic tax and debt increases, coupled with historic spending and unfunded pension liabilities with built-in unrealistic investment returns, call for a change in legislative mind-set, particularly when the state comptroller states, “We haven’t hit the bottom yet.”
We must find a way to work together to reach solutions to these challenges. The “my way or the highway” approach usually does not work. Minority members came forward with valid proposals, vetted by the nonpartisan Office of Fiscal Analysis, to help solve the state’s budget problems. It is time to take another look, reach out and find a middle ground. There may be some suggestions the governor and the majority agree with. A bipartisan solution is the only way out of Connecticut’s fiscal crisis.
Some food for thought: As Martha Washington once said, “I have learned that the greater part of our misery or unhappiness is determined not by our circumstance but by our disposition.”
Ms. Boucher represents the 26th District, which includes Bethel, New Canaan, Redding, Ridgefield, Weston, Westport, and Wilton.