Now that Republicans
have been cut out of the budget loop by Governor Dannel Malloy and progressive
leaders in the General Assembly, future budgets will be assembled by Mr.
Malloy, tax hungry progressives in the state legislature, SEBAC, a coalition of
union leaders authorized to negotiate contracts with the state, and economists
at the tax gobbling University of Connecticut (UConn).
According to a story that ran in CTNewsJunkie, “Economists at the University of Connecticut
recommended Thursday looking at instituting a statewide property tax to close
more than $1 billion funding gap in the state’s education cost sharing formula.”
In the UConn report,
contributing economist Stan McMillen notes that Connecticut has underfunded its
statutorily required share of educational funding to municipalities for the
last 5 years by about $1.09 billion. The UConn report weighs a few gap filling
options, including a sales tax increase to 8.3 percent and a boost in the
income tax of 13.8 percent, although the report seems to favor the statewide
property tax as an “outside the box” solution to the problem.
When asked whether
he anticipated any negative consequences from enacting a new tax, Mr. McMillen
said, according to the CTNewJunkie report, “it was a ‘pay me now or pay me
later’ issue.
“’We’re underfunding
by $1.09 billion. That’s going to have downstream consequences,’ he said.”
Long ago and far
away, during the gubernatorial administration of maverick Governor Lowell
Weicker, it was generally assumed by the state’s administrative arm – the
governor, the Democratic majority in the state legislature, municipal
politicians and the state’s media – that, confronted with a budget deficit, the
state of Connecticut should increase taxes. Connecticut, it was often said at
the time, was suffering from a revenue and not a spending problem. This theory,
happily embraced by all whose futures depended on rapidly increasing taxation,
could be entertained only in a state in which personal income was consistently
rising.
Somewhere along the
line, the theory was found wanting. In a recession, the receding tide lowers
all the boats – the obverse of President John Kennedy’s sage observation that
“a rising tide lifts all the boats.”
In a 1963 speech to
the Economic Club of New York, Mr. Kennedy explained in great detail how he
proposed to raise the tide and consequently lift all the boats. Mr. Kennedy was
intent on increasing revenue by – and here it is necessary for progressives to
hang onto their red Phrygian caps – decreasing business taxes. Once the rising tide had flushed money
into federal coffers, the federal government would have the resources necessary
to inaugurate Great Society programs.
“There are a number of ways by which the federal government can meet its
responsibilities to aid economic growth… the most direct and significant kind
of federal action aiding economic growth is to make possible an increase in
private consumption and investment demand -- to cut the fetters which hold back
private spending. In the past, this could be done in part by the increased use
of credit and monetary tools, but our balance of payments today places limits
on our use of those tools for expansion. It could also be done by increasing federal
expenditures more rapidly than necessary, but such a course would soon
demoralize both the government and our economy. If government is to retain the
confidence of the people, it must not spend more than can be justified on
grounds of national need or spent with maximum efficiency.
“The final and best means of strengthening demands among consumers
and business is to reduce the burden on private income and the deterrents to
private initiative which are imposed by our present tax system – and this
administration pledged itself last summer to an across-the-board, top-to-bottom
cut in personal and corporate income taxes to be enacted and become effective
in 1963…”
Mr. Kennedy was as
good as his word. His program was enacted and a cataract of
funds poured into the national treasury. Following Mr. Kennedy’s tax cuts,
enacted after the president’s death in the Johnson administration, unemployment
was reduced from 5.2% in 1964 to 4.5% in 1965 and further fell to 3.8% in
1966. Though it had been estimated that
the cuts would result in a loss of revenue, tax revenue increased in 1964 and
1965. The tide had lifted all the boats. After Mr. Kennedy’s assassination, his
successor, President Lyndon Johnson, diverted some of the swelling revenues to finance
his Great Society programs.
Would it not be a
useful idea for someone in UConn’s economics department to record Mr. Kennedy’s
address to the Economic Club of New York and run it on a continuous loop
through the ear buds of the professoriate at UConn?
In the meantime, the
idiot notion that Connecticut is suffering from revenue rather than a spending
problem has been exploded even within the editorial pages of the state’s left
of center media -- following the largest tax increase in the state’s history,
which followed 22 years after the second largest tax increase in state history.
That silly idea ought to be permanently buried in the fever swamps of
progressivism.
Comments
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But most of all, Malloy can’t skate through to next November on the hope that a state budget pieced together with accounting gimmicks and the introduction of Keno gambling will balance itself.
Unless the governor takes real action on structural cuts in spending and the size of state government, Tom Foley can argue that Malloy has done nothing to fix the state’s budget problem other than increase the tax burden on a wide range of Connecticut families and set them up for more by gimmicks that kick the can down the road.
We need leadership from Malloy on Connecticut’s tax and spending problem.
http://nhregister.com/articles/2013/06/19/opinion/doc51c2290891178675161070.txt?viewmode=fullstory
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The state website boasts that the Governor is cutting spending (next budget is up 5.6%); that the budget is balanced (OPM shows budget deficits as far as the eye can see), and GAAP-certified (only if GAAP stands for God Awful Political Pandering).
http://www.ctmirror.org/op-ed/2013/05/30/ned-lamont-budget-contains-even-more-promises-and-gimmicks-1