As state policymakers face the challenge of a major state revenue gap and the Governor prepares to release his budget proposal next week, the Better Choices for Connecticut coalition proposed several revenue reforms to help close the deficit and reduce the need for severe budget cuts at a news conference today. (Also see summary fact sheet.) The Better Choices coalition, made up of nonprofit providers, public service workers, and community and advocacy organizations, called on the Governor and legislators to adopt the measures proposed in their report to help maintain vital public services during the recession when they are needed most — including education, health, housing, job training, public safety, environmental protection, and transportation systems. Better Choices for Connecticut argues that revenues and tax subsidies must be on the table and that severe cuts to the budget will hurt Connecticut families and the chances for economic recovery.
The menu of revenue options advocated by Better Choices for Connecticut includes proposals to:
- Reform the personal income tax, including a State Earned Income Tax Credit (EITC) for working families and a temporary surtax on high-income households that would recapture the windfall achieved from the continuation of Bush-era federal tax cuts;
- Close corporate tax loopholes that benefit multi-state companies over local companies by implementing mandatory combined reporting;
- Scale back some of the state’s more than $3 billion in state sales and business tax subsidies (including exemptions, credits, deductions, and rate reductions);
- Roll back reductions to the estate tax, which affects only a handful of the state’s wealthiest residents;
- Reform Connecticut’s corporate income tax by applying a proportional tax to large “pass through” businesses that currently pay no corporate income taxes simply because of the way in which these companies are legally structured;
- Broaden the sales tax base to include services, rather than only goods;
- Restore the scheduled Petroleum Gross Earnings Tax rate increase; and
- Tax excess profits of electricity generators (windfall profits tax).
“As Governor Malloy has recognized, we must take a balanced approach to the deficit that includes revenue reforms,” said Jamey Bell, Executive Director of Connecticut Voices for Children. “This menu presents a wide range of long-neglected and needed reform options, including a reduction in the state’s vast ‘hidden budget’ of tax subsidies.”
“It’s important to recognize the critical role that state government plays in maintaining a stable society and competitive economy,” said William Cibes, chancellor emeritus of the Connecticut State University System and former secretary of the Office of Policy and Management under Gov. Lowell P. Weicker, Jr. “Revenues are necessary for functions ranging from keeping the highways plowed and enforcing building codes that guard against roof collapse to underwriting much of the cost of local schools.”
“During these difficult economic times, demand for public services has spiked just as revenues have declined,” said Maggie Adair, Deputy Director of Connecticut Association for Human Services. “This mismatch is at the heart of our budget problems, and we should not look first to slashing supports for families and communities when so many sensible revenue solutions are available.”
The report, “Better Choices for Connecticut: Revenue Solutions for FY 2012,” is available on the Better Choices website, along with a summary fact sheet.
Better Choices for Connecticut is a broad-based community coalition that supports a balanced and equitable revenue system that reflects the priorities and values of the state’s residents.
