News Analysis: To Tax or Not To Tax?
by Christine Stuart | May 17, 2007 7:53 PM
Posted to State Capitol
Earlier this week Gov. M. Jodi Rell said the state’s revenue picture was so good she didn’t think she’d need to increase income taxes to balance her proposed budget. But Democrats disputed Rell’s claim Thursday saying she was just responding to the public opinion expressed in a Quinnipiac Poll that said 62 percent of residents think state taxes are too high.
Rep. Denise Merrill, D-Mansfield, said Rell’s original budget raised taxes by about $660 million. The Office of Fiscal Analysis is saying the latest revenue increase is about $386 million, which means Rell “still has a shortfall,” of more than $250 million, she said.
If this is her tax plan then what is she cutting in her spending plan, Merrill said.
This morning Rell said there is no hole in her budget. She said given the new revenue projections she can do her budget with no tax increases. Click here to read her press release on the issue.
This afternoon Robert Genuario, Rell’s budget director, reiterated Rell’s statement that there is no hole.
He said the there’s $1.25 billion more revenue, which is more than enough to cover the original tax increase proposed. And Genuario said analysts did not project a deficits in the years to come. The new revenue stream is “more than sufficient,” he said.
What does the new revenue stream mean for the Democrats budget?
Speaker James Amann, D-Milford, said it allows them to offer tax cuts to 95 percent of the population, instead of the 90 percent originally projected. The tax cuts would be based on the Democrats plan to make the tax structure more progressive.
Republicans argued you can’t cut anyone’s taxes if you’re increasing spending by about $300 million over the current revenues in this year’s budget.
Amann said if those advocating no tax increase want to be “a mediocre state and do nothing” they can, but the Democrats are going to stand up for the middle-class, education, and health care.
Sen. President Donald Williams, D-Brooklyn, said when the governor unveiled her budget with tremendous expectations for increased municipal aid and education spending. “You put those expectations back into a box,” he said. “At this point you have to stand committed to delivering on those promises.”
Rep. Cameron Staples, D-New Haven, said if the governor doesn’t want to increase the income tax then there’s going to be revenue gaps in her five-year education plan.
House Minority Leader Lawrence Cafero, R-Norwalk, said “People don’t want tax increases period.”
But could the Democrats pass a tax package without the support of Rell and the Republicans?
Technically yes.
The Democrat-controlled House and Senate could implement a new progressive tax structure without the support of Rell because they have a veto-proof majority. The Democrats don’t have the power to approve their spending plan or Rell’s without an executive order to exceed the spending cap, so Rell still has a bargaining chip as negotiations continue.
Click here to read budget guru Keith Phaneuf’s report on the budget.
Comments (1)
Posted by: unionleo![[TypeKey Profile Page]](http://www.ctnewsjunkie.com/nav-commenters.gif)
| May 18, 2007 8:38 AM
There has not been a more opportune time in recent history to fix a broken tax structure. We need a balanced tax system to address needs, be more level in fits and spurts of the economy, and achieve equity, fairness and balance in approach. It makes sense to adjust when we are flush. It makes sense to address needs and provide sustainable resources to support them when it is easier. If the governor had a plan, or knew what a plan was, she would be taking a smarter approach. One that relies more on creating a legacy of building a better foundation for a sound and economically safer future for our state as opposed floating with the winds that Quinny blows every 6 weeks or so.