Wednesday, April 23, 2008

The Disappearing Act: Going, going...

Whatever you tax – and excessive regulation may also be viewed as a tax, since it forces companies to shell out money that might better be spent elsewhere – disappears, including, in the long run, revenues collected by the tax.

This is what is happening in Connecticut. Taxpayers and taxed companies are disappearing. The current budget is about $16 billion, slouching towards $18 billion; that’s more than twice the bottom line figure of the last pre-income tax budget.

Some of us are old enough to remember fondly the days of Democrat governors who were able, usually by threatening to burn down the houses of Democrat legislative leaders, to control the ravenous appetite for spending that always threatens to burst budget envelopes.

They are long gone.

High taxes have forced companies in Connecticut that cannot absorb the usual raid on profits to move elsewhere in search of lower labor costs, lower taxes and less entangling regulation.

During the terms of the last three governors, two of them Republicans and the third a faux Republican, Connecticut has pushed new business from its breasts, which have now run dry.

Unable to read the signs of the times, Connecticut’s Democrat dominated legislature has consistently piled spending on spending, taxes on taxes, regulations on regulations, and now – marvel of marvels – the surpluses Connecticut used to enjoy as a buffer and quickly spend during the good times have all but disappeared.

The prospect of an empty pantry, with a few frightened millionaires wiggling on the shelves and ready to bolt at the first sign that the state intends to dig a mine shaft into their pockets, has alarmed some of the big spenders at the Capitol.

When Gov. Jodi Rell issued a letter advising Democrat leaders in the legislature that the surplus – the amount of money the state has regularly overtaxed its citizens – had dwindled from a projected $263.2 million to $15.7 million, loud cries of protests were raised by leading Democrats.

“We must be extremely prudent,” Rell noted in a two page letter, “about any new state spending or new or enhanced programs. Moreover, we must engage in scrupulously straightforward budget writing and present a truly balanced budget. Using one-time revenues, underestimating costs, shifting payments from one fiscal year to another, and other approaches used in the past exacerbate shortfalls and lead to record deficits. I know you desire to avoid these problems as much as I do.”

The legislature will adjourn this year on May 7, at which point the pocket picking will cease.

The budget figures were “renounced” in a scathing letter to Rell by the two Democrat co-chairwomen of the legislature's appropriations committee, Sen. Toni Harp and Rep. Denise Merrill. The letter accused Rell of “mismanagement.” The two doubted that the governor had applied for Medicare grants amounting to $82.5 million. Four administrative heavyweights -- budget director Robert Genuario, deputy budget director Michael Cicchetti, Department of Social Services commissioner Michael Starkowski, and chief spokesman Christopher Cooper – responded at a news conference that that the forms seeking reimbursement from the federal government had been submitted, as the two chairs of the committee well knew.

Genuario did not indicate that the words “stop spending” were mentioned during his discussions with the two Democrat co-chairs of the appropriations committee. But if past practice is any guide to the future, the dwindling surplus no doubt will spur the tireless engineers of spending in the legislature to find some fertile as yet untapped new revenue source to sack and plunder.

Millionaires beware.

From this point forward, the words "cut spending" should be a rallying point for those who have not yet left the state and whose wallets are groaning under the spending assault. What this state of spending needs is a state budget referendum, ballot initiative and a bill designed to communicate to the people cost projections for every spending measure in advance of the passage of a bill.

All these measure can be accomplished in the upcoming state constitutional convention.

The time for the revolution is now.
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