Budget Cuts Threaten Health and Education Sector

HEALTH AND EDUCATION JOBS ARE BRIGHT SPOTS
DURING CONNECTICUT’S RECESSION

A new report on job and unemployment trends during Connecticut’s economic recession finds that the Health and Education job sector is the only area of the economy showing significant growth since the recession began in December 2007. The report by Connecticut Voices for Children, a research-based policy thinktank, finds that the combined Health and Education sector (the state’s largest sector) added 9,700 jobs (3.7% growth) from December 2007 to March 2009, while nearly all other major job sectors declined.

Connecticut Voices for Children warned that since the Health and Education sector relies on public sector investment, major state budget cuts to health and education programs could undermine the only significant area of growth in the state’s economy and weaken Connecticut’s competitive advantage – its well-educated workforce.

“The Governor and state legislators should be doing everything they can to maximize growth in the largest and fastest growing area of our economy,” said Douglas Hall, Acting Managing Director of Connecticut Voices for Children. “Taking a more balanced approach between budget cuts and revenue increases will help to protect our economy and speed our recovery. Severe cuts to health and education would be an ‘anti-stimulus package’.”

Because of Connecticut’s state revenue shortfall, Governor Rell and state legislators are considering a variety of budget cuts, including cuts that would cause strains on employers in the Education and Health sector:
· Cuts in funds for nursing homes, HUSKY health insurance, dental coverage for adults in Medicaid, Community Health Services, and School-Based Health Centers.
· Cuts in funding for magnet schools, charter schools, priority school districts, school readiness preschool programs, and child care quality improvement initiatives.

Using a model from the national Center for Economic and Policy Research, Connecticut Voices estimates that Governor Rell’s total recommended budget cuts to all state programs ($1.075 billion) in the next fiscal year (FY 2010) could result in a loss of approximately 14,700 jobs.

The budget submitted by the General Assembly’s Appropriations Committee also includes several cuts to health and education that could potentially cost the state jobs, but many of the cuts in the Governor’s budget, particularly health cuts, are reduced or eliminated. The General Assembly is able to avoid several budget reductions by taking a more balanced approach to the state budget, relying upon both cuts and increased revenue to close the budget gap.

“These budget cuts would mean fewer jobs, less access to education, and fewer dollars circulating in the local economy,” said Joachim Hero, Research Fellow at Connecticut Voices for Children and author of the report. “With household costs rising and jobs shrinking, the state must also do more, not less, to help families make ends meet and rebuild the economy.”

The report, “Connecticut’s Economy in Recession: Trends in Employment and Unemployment,” is based on data from the national Bureau of Labor Statistics, and also found:

· The 3.4% job loss in the current recession is more than three times the 1.1% job loss during the first year of the previous recession.
· The largest job losses were in Professional and Business Services (-16,100); Construction (-15,900); Trade, Transportation, and Utilities (-13,300); and Manufacturing (-12,400).
· Of the 9,700 jobs gained in the Health and Education sector, 8,000 were in Health Care and Social Assistance (including health, social work, family services, and child care) and 1,700 were in Education.
· Connecticut’s unemployment rate of 7.5% is the highest it has been since 1992.

To help avoid state budget cuts and raise the revenues the state needs, Connecticut Voices for Children recommends a variety of revenue proposals, including a more progressive income tax, closing corporate tax loopholes that enable corporations to shift their profits to out-of-state subsidiaries, and scaling back state subsidies to the entertainment industry though the “film tax credit.”

Click here for the report.

Republicans Will Kill Citizens’ Election Fund?

Yesterday, Connecticut Republican lawmakers released a
budget proposal which proposed eliminating $60 million from the Citizens’
Election Fund, effectively killing the program.

“The League of Women Voters opposes the Republican proposal. In
these tough economic times, we need a Governor and a Legislature that listens
to the people, not the industries that contribute the most money,” said Christine
Horrigan, government director for the League of Women Voters of Connecticut.
“The Citizens Elections program allows candidates to run for office free of
special interest money and we need this critical accountability measure now
more than ever.”

The inaugural year of the Citizens’ Election Program was an unqualified
success. The new law frees candidates from special interest money by allowing
them to participate in a voluntary program for public funds if they raise a
threshold amount of qualifying contributions from individuals in their district.
Once they qualify, candidates agree to abide by spending limits and forgo further
private contributions. In return they receive a grant from the state to run their
campaign, and if they are elected they head to the statehouse accountable
primarily to the voters who elected them, not the special interests who would
have financed their campaign.

Seventy-five percent of all candidates for Connecticut’s General Assembly
ran under the Citizens’ Elections program. Eighty-one percent, or 152 out of 187
of those elected to serve in the next General Assembly ran under the Citizens’
Elections program. In the Connecticut Senate, 89 percent of the seats, or 32 of
36, will be held by Clean Elections officials. On the House side, Clean Elections
officials will hold at least 120 of the 151 seats.

“We can’t go back to the corruption of the past when the name of the
game was pay-to-play,” said Cheri Quickmire, Executive Director of Common
Cause. “It wasn’t that long ago that John Rowland was giving no-bid
government contracts to special interests who gave him large personal gifts and even larger campaign contributions.

“From our perspective, the Citizens Election program has already paid for
itself by making it possible to reclaim the $20 million a year in unclaimed bottle
deposits,” added Cheri Quickmire. “The recent enactment of Connecticut’s new
law requiring five cent deposits on plastic water bottles and reclaiming the
collection of millions of dollars worth of unclaimed bottle deposits is the perfect
example of how the Citizens Election program can impact public policy.”

Environmentalists and others at the Capitol tried to make progress on
these two major issues for years, but the beverage industry and their lobbyists
with their generous campaign contributions kept reform at bay for years. 80%
of this General Assembly ran free of special interest money under the new law
and voted early in the session to pass the expanded bottle bill and to reclaim the
bottle deposit money. It is clear that landmark campaign finance laws passed in
2005 and 2006 have severely diminished the power special interests once
wielded in state government.

“It is no surprise that Representative Larry Cafero and Senator John
McKinney are leading the charge to gut this program,” said Tom Swan,
Executive Director of Connecticut Citizen Action Group. “They never were
supporters of public financing in the first place. This program is the most
significant anti-corruption measure adopted by the state. The Republican
proposal should be summarily rejected by all.”

Groups supporting the Ciizens Election Program In Connecticut include:


ACORN
AFSCME Council 4
American Postal Workers Union,
WestConn Area Local
Capitol Region Council of Churches
Citizens For Economic Opportunity
Citizens For Election Reform
Collaborative Center for Justice
Connecticut AFL-CIO
Connecticut Association of Human Services
Connecticut Citizen Action Group
Connecticut Common Cause
Connecticut Conference of the United Church of Christ
Connecticut Federation ofEducational and Professional Employees
Connecticut Green Party
Connecticut NOW
Connecticut State Employees Association
CCD
Connecticut Women’s Education and Legal Fund
ConnPIRG
Danbury Central Labor Council
Danbury Hospital Professional
Nurses Association, Local 5047
DemocracyWorks
Democracy for CT
Earth Matters
Fairfield County Labor Council
Grassroots Coalition, Inc.
Greater Hartford African American
Alliance
Greater Hartford Labor Council
Hartford Environmental Justice Network
Healthcare For All
NAACP-CT
Northeast Action
One Connecticut
People’s Action for Clean Energy
SEIU
Sierra Club-CT
Toxic Action Center
United Auto Workers-Region 9A
Veterans for Peace, Chapter 18
Western Connecticut Central Labor Council
Yale Students for Clean Elections
Youth for Justice

State Revenue Solutions for Connecticut

Connecticut’s revenue system is failing to provide the funds we need to support the public structures that help maintain our quality of life – our schools, transportation systems, environmental protection agencies, and public safety agencies. The state’s revenue shortfall is serious, but manageable. Connecticut can adopt a more fair, reliable and accountable revenue plan by:

Increasing income taxes for those who can best afford it (increased revenues: $0.8 to 1.2 billion). Connecticut’s wealthiest families pay 4.7% of their income in state and local taxes (after federal tax deductions for state and local taxes).

By comparison, middle-income families pay 10.2% and low-income families pay 10.9% of their income in state and local taxes. Increasing income taxes for the wealthiest residents will help to make our tax system more fair and to close the state revenue gap. Adopting higher income tax brackets for married couple families over $200,000, as recommended by the Better Choices for Connecticut coalition, would raise an estimated $1 billion in additional revenue to close the budget deficit, while affecting less than 7% of Connecticut taxpayers. Notably, even with this rate increase, the share of income paid in state and local taxes by Connecticut’s wealthiest 5% would remain smaller than what is paid by the “bottom” 95% of Connecticut families.

Closing corporate tax loopholes. ($130 to 150 million) Flaws in our corporate tax code are part of our revenue problem, costing Connecticut hundreds of millions of dollars in tax revenues each year.

Close Connecticut’s “Las Vegas Loophole” ($100-120 million). Flaws in state tax accounting rules enable many multi-state companies to artificially shift profits to subsidiaries in other states like Nevada, which has no corporate income tax. This enables them to avoid paying their share of Connecticut taxes, and shifts responsibility for taxes onto locally-owned businesses and individuals.

Connecticut should level the playing field for businesses in Connecticut by requiring “combined reporting” tax rules that are already in place in at least 22 other states, including neighboring New York and Massachusetts. This reform will fix arbitrary and unfair corporate tax "loopholes" that increase our state revenue gap.

Re-apply the corporation business tax to “S-Corporations” with graduated rates to protect small businesses ($20-30 million). Because of other loopholes, many large corporations do not pay corporation business taxes. Many of these “S-Corporations” are major businesses. In 2003, 18 of the state’s 100 largest business paid only a $250 business entity tax, which applies to these S-Corporations and certain other classes of businesses. Requiring that large corporations pay the corporation business tax, and establishing lower, graduated rates for small businesses, will result in a more fair and broad-based tax system.

Scaling back public subsidies to the entertainment industry ($90 to 100 million). Connecticut’s blank check to the entertainment industry is part of our state budget problem. The State of Connecticut is excessively generous to film companies, paying for 30% of the cost of making movies, regardless of how much income tax the companies owe the state. The costs of these film tax credit subsidies far surpass the amount given in tax credits to any other industry. These film subsidies are a blank check. There is no cap on the amount of money the state can lose through these tax credits.

The State’s own study, conducted by the Department of Economic and Community Development, estimated that the tax credits do not pay for themselves. For every dollar the State spends on film tax credits, it only gets back 20 cents, a loss of 80 cents on the dollar. (The study estimated 6 cents in increased revenues and 13 cents in budget savings would result from the tax credit expenditures.) Setting a cap on Connecticut’s film tax credits will begin to set some reasonable limits on the program and help to close our state revenue gap.

Increasing the sales tax by one percentage point ($575 to 625 million). We can also limit any harmful effects of this increase by creating a state earned income tax credit (EITC) to help working families (cost of $50 million) and a small business property tax credit (cost of $100 million). Both the small business credit and a state EITC would also act as an economic stimulus.

Increasing cigarette and alcohol taxes ($78 to 80 million). Increasing cigarette taxes will not only raise revenue, it will discourage smoking, particularly among Connecticut’s children and youth, thereby reducing long-term health costs.

Low Income Earners Pay Higher Taxes

Connecticut Falls Behind All Other States in Updating Its Tax Rules for Struggling Families

More CT families paying state income tax because of failure to adjust “tax threshold” for inflation

An increasing number of struggling, low-income Connecticut families are required to pay state income taxes, because the state has failed to increase the “tax threshold,” the income level at which families begin paying taxes.

Of the 42 states, including the District of Columbia, that have a state income tax, Connecticut is the only state that has not adjusted its tax threshold upward since 1991, according to a report released by Connecticut Voices for Children and the Center on Budget and Policy Priorities. As a result, more low-income families have been paying income taxes, and without legislative action, Connecticut will be taxing families at the poverty level within a few years.

When Connecticut first instituted its income tax in 1991, the state was a national leader in its support of low-wage families by not requiring many to pay the tax. At the time, Connecticut had the highest tax threshold in the nation. But by 2007, 22 states and the District of Columbia had higher tax thresholds than Connecticut. This trend exacerbates the problem of Connecticut’s regressive state and local tax system, in which the state’s wealthiest residents pay a far smaller share of their income in state and local taxes (4.7%) than do middle-income residents (10.2%) and lower-income residents (10.9%).

Low- and middle-income families pay a relatively larger share of their incomes in sales and property taxes, while higher income families pay a larger share of their incomes in income tax. In total, however, the state’s wealthiest families pay a much smaller share of their income in state and local taxes than do its middle and lower income families, because the state’s income tax rates are not progressive enough to offset the regressive sales and property taxes.

To make the state and local tax system more fair and to help stimulate the state’s struggling economic engine, Connecticut Voices for Children recommends:
• Increasing the tax threshold each year by adjusting it for inflation;
• Creating a state earned income tax credit (EITC), and
• Increasing the overall progressivity of the income tax so that taxes are distributed more fairly by increasing income tax rates for the wealthiest residents.

This would also help to raise additional revenues necessary to help close the expected state budget deficit.

“We have a tax system that is increasingly unfair to working families,” said Doug Hall, Acting Managing Director at Connecticut Voices for Children. “We should catch up to our neighboring states and the rest of the country with these simple measures that would give a boost to our economy and make our tax system more fair and adequate.”

The EITC is a tax credit targeted to low-income working families. Currently 22 states, including all of Connecticut’s neighboring states and the District of Columbia, have state EITCs, but Connecticut has not adopted one.

“The federal earned income tax credit has enjoyed broad bipartisan support for decades,” said Jamey Bell, Executive Director of Connecticut Voices. “Connecticut should join its neighboring states and build on the success of the federal model with a state earned income tax credit that rewards work and helps to alleviate the unfairness of Connecticut’s tax system.”

In 1991, the state income tax threshold for a family of four was 73% above the federal poverty level. However, today, the threshold is just 14% over the poverty line, the largest decline in the nation. Connecticut’s trend is the opposite of most states. On average, states have increased their tax thresholds by 25% relative to the poverty level. A family of four in Connecticut earning just $24,100 owed the state income tax in 2007 (if they were not eligible for the property tax credit because they owned neither a car nor a home). If the tax threshold had remained at the same level above the federal poverty line, today it would be $38,713.

CT’s Wealthy Families Pay Smaller Share of Taxes

CT’s Wealthy Families Pay Smaller Share of Income in State and Local Taxes than Middle- and Low-Income Families

Report supports efforts to pass a more progressive income tax

Connecticut’s wealthiest residents pay much less of their income in state and local taxes than do the state’s middle-income and poor families, according to a report released by Connecticut Voices for Children today on the tax filing deadline. The research-based policy thinktank called on the Governor and state legislature to support progressive income tax reforms recently endorsed by the legislature’s Finance Committee to help ensure that those who can best afford it contribute a greater share toward closing the state budget deficit and avoiding damaging budget cuts.

The report, “Who Pays? The Unfairness of Connecticut’s State and Local Tax System,” was based on an analysis of state and local tax data by the national Institute on Taxation and Economic Policy. The study found that after federal income tax deductions for state income and property taxes, the wealthiest 1% of Connecticut’s families (with average income in 2007 of $4.2 million) paid only 4.5% of their income in state and local taxes. This was less than half the share of income paid in these taxes by the state’s middle-income families (9.3% of their average income of $55,000) and the poorest 20% of families (12.1% of their average income of $12,200).

“Before Connecticut policymakers make severe state budget cuts that could harm Connecticut families and the economy, they should at least make sure that the wealthiest residents are contributing their fair share toward the common good,” said Douglas Hall, Acting Managing Director at Connecticut Voices for Children and author of the report.

The report was released at Connecticut Voices for Children’s 8th Annual State Budget Forum, held at the state Capitol to discuss options for closing the state’s revenue gap. The report comes as the state faces a projected deficit of $4 billion in the next year (Fiscal Year 2010).


Among the study’s other findings:

· While some assert that Connecticut’s wealthiest families pay more than their fair share of tax, citing income tax paid as a share of the state’s total income tax returns, it is also true that they report the largest share of income in the state. According to the report, the top 1 percent of earners in 2007 (with adjusted gross income of $850,000 or more) paid 37% percent of the state’s total income taxes, but also reported 35% of the state’s total income. So the share of taxes paid by the wealthy is a reflection of the fact that they enjoy a larger share of Connecticut’s total income than other residents, not that they are taxed far more heavily.

· Low- and middle-income families pay a relatively larger share of their incomes in sales and property taxes, while higher income families pay a larger share of their incomes in income tax. In total, however, the state’s wealthiest families pay a much smaller share of their income in state and local taxes than do its middle and lower income families. Why? Connecticut’s income tax rates are not progressive enough to offset the regressivity of the sales and property taxes. Indeed, most Connecticut residents (61%) pay the same 5% income tax rate as the wealthiest millionaires.

To help in alleviating the unfairness of the state and local tax system and to ensure that the state has sufficient revenues to fund essential programs to support all Connecticut families and keep the state economically vibrant, Connecticut Voices for Children recommends that state lawmakers:

· Increase the income tax rate for Connecticut’s wealthiest residents. Adopting higher income tax brackets for married couple families over $200,000, as recommended by the Better Choices for Connecticut coalition, would raise an estimated $1 billion in additional revenue to close the budget deficit, while affecting less than 7% of Connecticut taxpayers. Notably, even with this rate increase, the share of income paid in state and local taxes by Connecticut’s wealthiest 5% would remain smaller than what is paid by the “bottom” 95% of Connecticut families. That is, this change would only begin to make the state and local tax system less regressive.

· Provide additional state aid to Connecticut’s cities and towns to reduce Connecticut’s relatively high property taxes. Providing full funding for the Payment in Lieu of Taxes program and increasing the state’s share of K-12 education funding to close to 50% would reduce pressures on local property taxes; and reductions in local property taxes would provide particular benefit to our middle-income families and to small, start-up businesses.

· Adopt a state earned income tax credit (EITC) and increase Connecticut’s personal income tax exemptions. Both measures would make Connecticut’s tax structure fairer at the lower end of the income scale and help to compensate for the fact that Connecticut’s tax threshold – the income level at which families begin to pay the state personal income tax – has not changed since the tax was adopted in 1991. As a result, an increasing number of low-income families must pay income taxes.

“Connecticut residents of all income levels benefit from our public structures -- our schools, roads, and public safety agencies," said Jamey Bell, Executive Director of Connecticut Voices for Children. "We all have a stake in ensuring that we have the revenues we need to protect the services that help make our state a great place to live and work.”

The report, Who Pays? The Unfairness of Connecticut’s State and Local Tax System, is available on the CT Voices Web site at www.ctkidslink.org.

Connecticut Voices for Children is a research-based policy and advocacy organization that works to advance strategic public investment and wise public policies to benefit our state’s children, youth and families. The Institute on Taxation and Economic Policy (www.itepnet.org) is a non-profit, non-partisan research and education organization that works on government taxation and spending policy issues.

CT Democrats’ Budget

Connecticut Juvenile Justice Alliance Statement

The Democrats alternative budget preserves Connecticut’s commitments to children and families while being fiscally responsible. The budget supports the Raise the Age law, removing non-violent minors from adult prisons, and Family Support Centers, a successful model for delivering preventive services to struggling families.

The Raise the Age initiative, which has already been signed into law, can and should proceed. The Democrats’ proposal shows that including 16-year-olds in the juvenile justice system can be done with minimal impact on the state’s budget. We applaud them for carefully reviewing the true cost of the reform and finding a way to implement this important public safety policy.

Governor Rell signed Raise the Age into law in 2007 and said that her proposal to delay implementation was based on financial considerations alone. Likewise, all arguments against the bill have centered on cost -- not on any philosophical objection to treating minors as juveniles, which is already the practice in 47 other states. The budget proposal proves that we can begin raising the age without burdening taxpayers. Thus we expect that a broad coalition will emerge to support this common sense reform.

We regret that the proposal does not extend to 17-year-olds, and will continue to work with stakeholders to find a way to include these children in the juvenile justice system as quickly as possible.

Even in hard times, it is essential to invest in our state’s future. Each non-violent minor diverted from the adult system is far less likely to sink into a long-term criminal career and far more likely to become a productive and taxpaying citizen. Similarly, Family Support Centers are successful at helping youth before they need more costly interventions or become involved in the juvenile justice system.

The Alliance applauds the alternative budget's provisions for Family Support Centers. State law mandates that families in every community have access to Family Support Centers, a gateway to services like family mediation, educational advocacy, mentoring, crisis intervention, and intensive, in-home therapies. The centers have been enormously successful in early intervention and the prevention of involvement in the juvenile justice system. Unfortunately, they are currently available to only 130 of the state's 169 communities. This breaks faith with families who are denied services simply because of their addresses. It also breaks faith with taxpayers, as it limits the use of a model already proven to reduce costly delinquency.

For more information about Raise the Age and Family Support Centers, visit: www.sayyesct.org.

Colleen Shaddox
203-785-8520
204 Davis St.
Hamden CT 06517
colleen@qsilver.com

Democratic Candidates

One of MyLeftNutmeg's own was honored by the Fairfield Democratic Town Committee yesterday. In attendance were MLN superstars of the past Maura and Branford Boy and various other disreputable characters some of whom are pictured below:

1. Three non-candidates for governor and senator

2. MLNer with unidentified gubernatorial candidate

3. Two MLNers with unidentified gubernatorial candidate