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Surpluses Show There's No Need For Tax Hike

May 6, 2007
Commentary By LAWRENCE F. CAFERO JR., and LOUIS DELUCA

This legislative session will be memorable if for no other reason than that House and Senate Republicans offered an alternative no-tax-increase budget proposal to the two competing plans already on the table.

Earlier this year, Gov. M. Jodi Rell took an extraordinary approach to funding education and subsequently presented accountability measures at the local level in her budget. The governor's budget, however, increases income tax rates across the board by 10 percent.

The Democrats countered with a budget that increases spending by an enormous $2.1 billion over the next two years - a 14 percent increase.

They also want to raise taxes on higher income brackets by as much as 40 percent. The Democrats would add 1,078 new state employees over the next two years, more net new jobs than Connecticut as a whole created between 1990 and 2005.

We, like many members of the public, asked one simple question: How can you rack up a surplus of $1 billion for 2006 and $600 million-plus in the current year and then increase taxes for this year and next? Budget surpluses, by definition, mean you are overtaxed. Now state government wants to tax you more?

This did not make any sense to us.

It is time to consider a third approach, one that meets the needs of Connecticut without raising taxes. And that is exactly what we did.

To begin, we needed to look at our state budget in a new, innovative way and question all presumptions and assumptions of the past. We started with our state's revenue estimates.

What we found is that for 15 years, since the inception of the state income tax, the state has consistently underestimated tax revenue by more than $5.5 billion. The result of this underestimation has been tax increases to meet projected shortfalls that never come true and bulging surpluses such as the one we have now.

Using our current tax structure, and with no tax increases, we can pay for our budget by relying on more precise revenue estimates. Given Connecticut's status as the highest taxed state in the union, we felt the price tags for both the governor's and the Democrats' budgets are too great.

It is the responsibility of government to provide its citizenry with the services it needs, from an efficient transportation system to a clean environment, good schools, affordable energy and care for those most at risk, whether they be elderly, children or disabled. Who can argue that each of those constituencies are due equal consideration?

The no-tax-increase budget commits unprecedented taxpayer dollars to those vital areas we have outlined.

It does not punish the middle class, as the Democratic plan does, because we would restore numerous tax exemptions that working households have come to rely on.

Our Republican alternative budget plan - and it is just that, a budget vetted through the nonpartisan legislative Office of Fiscal Analysis - is honest and simple.

We set aside an additional $358 million for education cost-sharing over two years, whereas in the past the legislature has provided an increase of only about $35 million a year. We infuse health care providers and hospitals with another $274 million to expand access to quality care, and we add another $26 million to prevent any more nursing homes from closing.

We want to replenish environmental cleanup funds because of the consequences that future generations will face if we fail as stewards of the state's precious natural resources.

Under our plan, towns and cities are not shortchanged when it comes to road maintenance, money they are due from the casinos or the funds they use to replace lost tax revenue they cannot collect on state property within their borders. Our budget increases spending in these areas by $23 million.

And what about the Democratic boast that their budget cuts taxes for the middle class? Using the Democrats' own numbers and assuming the rosiest of scenarios, you could buy a cup of coffee with their tax cuts. A grandmother living on a $35,000 pension/part-time salary combination would reap an additional $1.50 a day.

Factor in all the tax exemptions that working families and taxpayers will lose under the Democrats' proposal - clothing, Internet transactions, home sales, even funeral expenses - and the picture is even bleaker. A couple earning $60,000 a year would receive a tax advantage of 46 cents a day if they buy clothing, shop on the Internet, sell a home or have to bury a loved one.

The budget stakes this year are high. We fully appreciate the responsibility we have to the people of Connecticut to provide resources to maintain our quality of life. We just don't believe we need to raise taxes to do it.

As Republicans in the General Assembly, we need to offer common-sense, constructive solutions to today's problems. We strongly believe that raising taxes should be a last resort, rather than a first. You've asked: Why do we need to raise your taxes? The answer for us Republicans is very simple: We don't.

For more information on our no-tax-increase budget proposal, please visit our website at www.housegop.ct.gov.

Lawrence F. Cafero Jr. is House Republican leader in the state General Assembly and Louis DeLuca is Senate Republican leader.