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State Can't Tax Way To Prosperity

M. Jodi Rell

August 02, 2009

There is a continuing battle at the Capitol over the state budget, and those with the most at stake are the families living in Connecticut, the businesses operating in our state and the men and women they employ.

This fight is not about political ideologies or economic theory. How much government should spend, how much it should tax and what kind of budget will move us toward economic recovery are questions that affect every Connecticut family — and the answers will determine the future of our state for years to come.

The budget will determine whether we start putting people back to work or continue to lose jobs. The budget will define the opportunities we create for our children. The budget will make structural changes to government that will cut it down to a size our taxpayers can afford — or set us up for budget deficits in future years by maintaining an unaffordable status quo.

Since I unveiled my first budget proposal in February (I released my third proposal three days ago), I have argued that we must reduce the size and cost of government. I have proposed deep, painful cuts in spending. Hardly a program or service goes untouched. They were cuts I did not want to make — but I had to make them. I looked at budget requests like a family looks at the stack of bills on their table: "How can I pay all of these? There's just not enough money."

In other words, just as hardship is at the door for thousands of Connecticut households, it is also at the door of state government. Families are cutting back and so must state government. It's that simple and that logical.

Or is it?

I have been negotiating with the Democratic majority for months, but it has been become painfully clear they cannot — will not — cut state spending.

In the Democrats' budget proposal Thursday, they offered $130 million in spending cuts — that's $130 million out of a $37.9 billion budget, or about three-tenths of 1 percent. In this recession, which family, which business, which organization has only had to cut its spending by just three-tenths of 1 percent?

By comparison, I have proposed $1 billion in spending cuts — nearly ten-fold what the Democrats offer.

Twice I have proposed budgets that would have eliminated the deficit by cutting spending — without increasing taxes. Twice my budgets were ignored by the Democratic majority. Not one cut, not one reduction was acceptable. They lamented that government needed every program, every service, every layer of bureaucracy.

Families could cut back — but not government. Tax increases (and not just on the wealthy) were the only answer, they said.

First they proposed $3.3 billion in tax increases, then they proposed $2.5 billion in tax hikes and, on Thursday, they offered $1.8 billion in taxes on the wealthy, on businesses, on smokers and more. If nothing else, my battles with them have their tax proposals going in the right direction.

But the time for battling must end. I continue to believe that imposing massive new taxes is the worst thing we could do during one of the worst economic downturns we have ever seen. But the fact is that Democrats overwhelmingly control the General Assembly — they have a "veto-proof" majority — and they have made it clear they are interested almost exclusively in tax increases.

In an effort to compromise, to do the job the people of Connecticut want us to do — pass a budget — I offered a third budget proposal that calls for $1 billion in spending cuts and a modest $391 million in tax hikes — increases in sin taxes and a temporary surcharge on corporate taxes.

We need a budget. We need to finish our work and focus our efforts on creating jobs for our citizens. But we need a responsible, affordable budget. Two years from now, there will be no federal stimulus to prop up the status quo. Two years from now, there will be no rainy-day fund.

The size and cost of government must be reduced over the long term or we will find ourselves confronting more budget holes, bigger holes, down the road.

I would prefer no new taxes at all. But our state needs a budget and the Democrats have made it crystal clear they will not support any budget that does not include new taxes. Compromise is required, and I invite the legislative leaders to join me in that compromise.

I am ready to work with the legislature, but I will not strike a deal simply to get a deal. I will continue to insist on a budget that is right for the people of Connecticut — a budget that helps families, creates jobs and restores economic opportunity.