Posted on 11/16/2012 9:06:13 AM PST by SeekAndFind
As Congress considers massive tax hikes to fix the U.S. deficit, the state of Connecticut is worth a look. There, a similar strategy is failing epically.
Governor Dannel Malloy’s budget chief told the state legislature on Wednesday that Connecticut was facing a $365 million deficit for this fiscal year. That’s nearly twice as big as the $205 million estimate released last week by the Office of Fiscal Analysis and the Office of Policy and Management. And it’s more than six times what Governor Malloy, a Democrat, had estimated before the election.
If you think that discrepancy is suspicious, you’re not alone. And consider this: Democrats, who hold the majority in both houses of the state legislature, voted to postpone the release of the fall consensus revenue forecasts, which revealed Connecticut’s rather ugly fiscal picture, until after November 6. Democrats say the delay was in order to give a more complete financial picture; Republicans say it was a political ploy. Come Election Day, Republicans failed to gain additional seats in either chamber of the legislature.
That’s a pity, because Republican lawmakers have correctly identified the problem: Connecticut has consistently spent too much, and then tried to fix the budget shortfall by raising taxes.
In 2011, Democrats pushed through record-breaking tax increases, to the tune of $2.6 billion in two years. They raised marginal tax rates on all incomes over $50,000. They hiked the sales tax on non-luxury goods by nearly 6 percent. They lowered exemptions on inheritance and estate taxes by $1.5 million. They nickel-and-dimed Connecticut residents with additional taxes on everything from pet grooming to pedicures to yoga to hazardous-waste removal. And, in a Sheriff of Nottingham twist, they even stuck it to the poor, ending sales-tax exemptions on necessities including non-prescription medications and cheap children’s clothing.
Pity the Nutmeggers. Connecticut’s Tax Freedom Day is now May 5, the latest in the nation, according to the Tax Foundation. Even before the record-breaking tax hikes, Connecticut ranked third in the nation for highest combined state and local tax burden. Now, the state’s debt per capita is $27,540, surpassed only by Alaska’s, Hawaii’s, and New Jersey’s, according to a report released last month by the non-partisan State Budget Solutions Project. And the Tax Foundation ranks Connecticut 40th in the nation for the tax climate for business.
Furthermore, while demanding financial sacrifices from its residents, the state government has kept on spending. When the fiscal year ends on June 30, the state will have spent around $20.5 billion, up from $19.1 billion in 2011. That’s a spending increase of roughly $1.4 billion, or 7.2 percent.
Meanwhile, the state’s tax revenue — for the fourth consecutive time — has fallen short of the governor’s projections. Statistics show that Connecticut’s high earners (a category that includes its small businesses) are particularly sensitive to income-tax increases, and are wont to leave when taxes go up. As early as the fourth quarter of 2011, Connecticut was witnessing lower-than-projected yields from its high earners, possibly because of population flight. As Connecticut continues its spend-and-tax frenzy, its remaining residents must know that another state is never more than 50 miles away.
All this adds up to an unsustainable situation. In the past, the governor has relied on quick fixes to delay spending cuts and manage the deficit. But now, the state’s Republican lawmakers claim their opponents are out of options. Earlier this year, Barron’s named Connecticut the worst-run state in the nation. And this year’s deficit is nothing compared to what next year’s is likely to be; government analysts now project that in fiscal year 2014, Connecticut will face a $1.1 billion budget hole.
Democrats’ answers are hardly encouraging. “It’s certainly premature to even speculate” about where to cut spending, according to Laurence Grotheer, press aide for Connecticut’s Democratic Senate Majority Office. “The session starts in January, the governor will make his proposal, and the legislature begins its work,” he told National Review Online on Wednesday. (Punt.)
So what’s Malloy planning? “The governor will cut spending to get there, and he will not increase taxes,” said the governor’s senior adviser, Roy Occhiogrosso. “We will end the year at balance.”
That’s a claim that stretches credulity.
— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.
The rats are starting to get desperate to hold on to their bloated, failed governement employees, retirees and parasites...O’Malley is like every other Leftist, a liar.
isn’t that huge indian casino in Conn?.....maybe the shysters can ask for a donation...I’m sure the indians financed the rat campaigns...
The problem with Connecticut is that there are simply too many rich people who run the place. However, they aren’t stupid, and they will eventually see that there is no end to tax increases.
Malloy only won by a tiny majority, the next time it might be the other way around. The main problem is lack of good Republican candidates.
I really hate living in CT. I am making plans to move in the next year.
What angers me, is that they had an emergency fund 2 years ago what that jerkoff Malloy came around. He drained it into the state employees pension. Then last year Hurricane Irene and the October snowstorm comes, it was bone dry. No emergency fund. So Malloy was first in line for FEMA aid.
He came in and raised every tax in the state, and they are still have problems. That included a “retro-active” income tax increase in 2011. I know what will happen next. They will raise them again.
I cannot wait to move. I know there are taxes everywhere, maybe I can hope there are less idiots/corrupts managing the money.
“It’s certainly premature to even speculate” about where to cut spending, according to Laurence Grotheer, press aide for Connecticut’s Democratic Senate Majority Office.
CT has/needs a Democratic Senate Majority Office? Further, this office needs a press aide/spokeshole? I ‘speculate’ that a place to start may be in eliminating both the ‘press aide’ (try using e-mail to make announcements)and the “Democratic Senate Majority Office” (why is there a need for this office?).
Yet another state to stay out of. Let them fester in their own juices.
Malloy sucks, to be sure. But I really do find a few things about living here fascinating (if I didn’t have to pay for it, that is.)
It speaks to what’s going to bankrupt the whole country: Malloy tries to make cuts – some silly, sure, but he actually tried to do “little” things like close a bunch of the Welcome Centers to save a few million. “OH NO! YOU CAN’T CLOSE THE WELCOME CENTERS!!!” cried the populace.
He actually tried (as much as a Dem can) to take on the teacher’s unions. “OH NO! YOU CAN’T DO THAT!” cried the populace.
Reduce state pensioners? “OH NO! YOU CAN’T DO THAT” cried the populace.
It’s a joke. Get a job with the state and you can be an incompetent buffoon but you’l get early retirement and a full pension and guaranteed promotion/raises. Work there long enough and you lose sight of the real world and actually feel persecuted. It’s a conversation I’ve had a million times – as my wife works at a large insurance employer that continues to lay off highly skilled workers every couple months, year after year.
It’s insanity.
The Bigger picture point is, the majority of the nation will never, ever allow real cuts to ever be made ever and any politician that does it, will be out of a job. Term limits would solve that issue in a heartbeat.
America had a choice between a GM mgt style vs. a Ford / Mulally downsizing, re-engineering processes and getting healthy.
America chose and CT especially chose the GM model.
It is that simple, we are so screwed.
We has individuals need to metaphorically divest of GM stock, i.e. prepare for the crash of the leviathan, it is 2004 and like George Will predicted, we can see it coming....
Sounds just like what they did in New Jersey. Corzine handed CHristie a much bigger deficit than they were disclosing.
“The main problem is lack of good Republican candidates.”
Not really. We had some really good candidates in my area. They were even polling at over 60%. They lost by over 50%.
It’s clear that there was some serious screwing with the election.
Well the state was happy to announce on the front pages the other day that the State of Ct. Is leading the way on implementing Obamas Health care exchanges,so there,that will solve the fiscal train wreck of the Democrat socialist state of ct.
voters are so used to be lying lied to on some states, this will get about 5 secs. on the news, if that.
I live in California, the same over-staffed, overpaid and underworked thousands of state workers, past and present, still munch at the trough like a famished hog.
The Democrats have one play in their playbook...raise taxes and fees on business.
They produce nothing, and the parasites keep on eating what the state workers haven’t eaten, so their only source of cash is to shake down businesses.
Trust me, the feeders and the looters will demand more and more as the unions, illegals and welfare class (see illegals) continue to squeeze businesses to relocate or close (see Hostess).
Hunker down, Obama, Holder and Malloy (and that Libtard O’Malley in MD) will be coming for your guns and 401K.
Their more Conservative then you would think. n/s
Tom Scott should've been elected rather than Rowland, but what is really needed in Hartford is a STRONG CONSERVATIVE REPUBLICAN PARTY and not these RINOs.
bfl
He didn’t win, his rodent buddies stole the race for him.
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