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And the Losers Are - the Poor

The governor wants the poor to pay for the state deficit. Now it's up to Democrats to broker a fair budget

Andy Bromage

June 09, 2009

When Gov. Jodi Rell presented her state budget proposal in February, she promised "shared pain" and "shared sacrifice."

State government was $8 billion in the hole — the largest deficit in Connecticut history — and climbing out would require a wide array of choices the public might not like.

What followed was a budget that was masterful in its politics and pitiless in its policies: Rell would avoid hiking the income tax and cutting money for cities and towns by making the elderly pay more for prescription drugs and slashing funds for needle-exchange programs (see sidebar), just two of what turned out to be a laundry list of draconian cuts to state services.

Not to worry, political insiders said. Cuts alone can't possibly close a deficit this large. Taxpayers — especially the wealthy — will have to pay more. Rell will eventually be forced to sign onto a so-called millionaire's tax. After all, she did promise shared sacrifice, right?

Wrong. With the legislative session sputtering to an anti-climax and budget talks stalled, Rell recently unveiled a revised budget plan that reinforces what "shared sacrifice" means to her:

• flat-lining state money for needle-exchange programs, which are credited with dramatically reducing HIV/AIDS infections in Hartford, Bridgeport and New Haven.

• eliminating inspectors that ensure state nursing-home patients aren't living in squalor.

• hiking bus fares from $1.25 a ride to $1.75 a ride — a blow to mass transit and the car-less class.

• cutting a half-million dollars for treating prison inmates with debilitating mental illnesses.

• yanking money for community health centers, mostly used by low-income families, even as the Obama administration is directing more money to them.

The governor has steadfastly refused raising taxes, a move that would spread the burden between those who can afford to pay more and those who can't. Instead her administration has heaped the pain onto the most vulnerable populations, even as the recession magnifies the need for state safety-net programs.

"In a recession, the poor are impacted the worst, and when you have cuts in services when people need them the most, it's counter-intuitive," says Maggie Adair, policy director at the Connecticut Association for Human Services and co-chair of the Better Choices for Connecticut campaign, a coalition of groups pushing for a progressive income tax.

Now with the budget battle in extra innings, it's up to the Democrats who control the House and Senate to force Rell's hand and broker a compromise that evenly spreads the pain around.

Rell makes it sound like preserving safety-net programs by raising taxes simply isn't an option.

"One thing we hear over and over is 'just raise taxes,' or 'raise taxes on the wealthy' — that's the newest refrain — 'and it'll help cover this program,'" Rell said last week on WNPR. "You can't do that. There's just not enough money to pay for everything. No matter how much you think you can tax your way out of this, it just doesn't exist."

She's wrong. A Democratic taxation bill would raise more than $2 billion over two years by replacing the flat 5 percent income tax with a progressive one that taxes earners making $250,000 and up between 6 percent and 7.95 percent.

If there's one thing Connecticut's got, it's millionaires — more than all but two states, by some counts. The Rell administration might not want to raise taxes on this group, but it could. Rell's implication that you can't "pay for everything" by taxing the rich misses the point. You probably can't pay for everything, but with an extra $2 billion you could pay for a whole lot, and spare residents in need a lot of anguish.

The sheer size of the deficit means that any final solution is bound to contain deep and painful cuts. The question now is whether Democrats will soften the blow by persuading the governor to make those with means to share the sacrifice.

"We will have to accept cuts we absolutely detest in order to get a budget agreement," says Derek Slap, spokesman for the Senate Democrats. "But there are many people who are seriously struggling across the state and from an issue of just fairness, we're asking people who can afford to pay a little more to be part of the solution."