Coalition Says Rell Budget Proposal Would Damage Economy;
Calls for Progressive Income Tax, Fair Corporate Taxes
Better Choices for Connecticut, a statewide coalition advocating for state revenue solutions, criticized Governor Rell’s latest state budget proposal as a fundamentally unfair plan relying on cuts that harm middle- and low-income families, while requiring no sacrifices from the state’s wealthiest residents and corporations. The coalition also argued that the Governor’s budget would further delay Connecticut’s economy recovery, add to the ranks of the unemployed, drain public investment from the economy, and pull the rug out from underneath families struggling through an economic downturn. The Coalition instead urged the Governor to adopt a more balanced approach between revenue increases and spending cuts, such as the tax and budget plans adopted by Appropriations and Finance Committees of the General Assembly.
“We need to address our state’s revenue shortfall with a revenue solution and avoid severe cuts that will cause damage to our economy and our struggling families,” said Maggie Adair, Policy Director at the Connecticut Association for Human Services and co-chair of Better Choices for Connecticut. “Governor Rell’s proposal is an anti-stimulus bill that fails to reform our inadequate revenue system.”
The Governor’s proposed budget cuts are in addition to the budget she proposed back in February. Among the dozens of severe cuts proposed by the Governor:
· Cuts in fees paid to health care providers in the state’s Medicaid program, including nursing homes.
· New fees for elderly residents who receive home care services that help them to stay out of nursing homes.
· Reduction in funding to nonprofit providers, resulting in a reduction of services.
· Cuts in financial aid to college students.
· Dramatic cuts to job training and education.
· Closure of two vocational-technical colleges.
· Elimination of programs supporting people with AIDS.
· Cuts to the HUSKY health insurance program for children and parents.
· Suspension of funding for Family Resource Centers.
· Closure of Riverview Hospital.
· Significant cuts in the Department of Development Services, Social Services, and Mental Health and Addiction Services.
“The proposed cuts will further damage our state’s economy and seriously jeopardize the services that are provided to our state’s most vulnerable residents,” said Liza Andrews, Public Policy Specialist at the Connecticut Association of Nonprofits. “Private providers have been underfunded for years and would take further reductions under this budget proposal, all of which will put our state’s residents at risk of falling further into poverty and illness.”
The Better Choices for Connecticut campaign, which was formed by nonprofit providers, public service workers, and community and advocacy organizations, advocates for a plan to balance the state’s budget primarily with targeted tax increases on the state’s wealthiest residents. The group says that other proposals that depend heavily on service cuts will make the state less fiscally sound in the long-run.
The Coalition supports a proposal by the Finance, Revenue and Bonding Committee for a progressive income tax that will raise rates on the state’s wealthiest earners. The proposal calls for increasing the tax rate to 6% on taxable income for married couples earning more than $250,000, 7% on income greater than $500,000, 7.5% on income greater than $750,000, and 7.95% on income greater than $1 million. Currently the tax rate on married couples earning more than $20,000 is 5%. Connecticut’s middle-income and lower-income families pay much more of their income in state and local taxes than do the wealthiest families. After federal tax deductions, the wealthiest 1% of Connecticut’s families pay 4.7% of their income in state and local taxes. This is less than half the share of income paid in these taxes by the state’s middle-income families (10.2%) or low-income families (10.9%). Better Choices for Connecticut noted that Governor Rell proposed an increase in the income tax in 2007 and urged her to adopt the current proposal.
In addition, the group supports:
· Closing corporate tax loopholes. Flaws in Connecticut’s tax code – “loopholes” – enable many large and profitable corporations to avoid paying their fair share and shift the responsibility for taxes onto in-state businesses and individuals. For example, many multi-state corporations exploit flaws in the tax code that allow them to artificially shift profits to their subsidiaries in other states and avoid paying taxes. Closing these loopholes through “combined reporting” – as at least 22 other states do – would mean that companies could not use creative accounting to shield themselves from taxes.
· Scaling back public subsidies to the entertainment industry. In Fiscal Year 2009, the state will lose an estimated $117.5 million in revenues to the television and film industry through film tax credits. These subsidies far surpass the state’s public investment in any other industry or business activity through tax credits. There is currently no cap on how much revenue Connecticut can lose through these subsidies.
Better Choices for Connecticut is a community coalition working to help Connecticut make better choices on ways to improve the state’s imbalanced revenue system so that it advances opportunity for shared prosperity for all Connecticut residents; preserves services for children, families and the elderly; creates and sustains good jobs; and reinvests in the middle class and our communities.
