Wait, What?

Has it come to this…?

Mar 05

jonpeltoBudget Cuts, Human Services, Malloy, State Budget, Taxes Budget cuts, General Assembly, Human Services, Malloy, State Budget, Taxes 4 Comments

Over the weekend, there was a heart-wrenching commentary piece in the Hartford Courant that was written by the father of a 28-year-old intellectually disabled daughter.

His daughter’s name is Katie and he wrote, “She lives at home with my wife, Donna and me. She is the love of our lives and we embrace the gifts she brings to us and to all who know her.”

His piece was entitled, “Amid Stark State Cuts, A Father’s Plea: Who Will Care for Katie?”

Katie’s father reported that “Last November, the governor exercised his rescission authority and, without notice, reduced funding for people with disabilities who receive residential and day services. Making these cuts permanent, as proposed, delivers a body blow to vital assistance Katie receives from the Department of Developmental Services through organizations such as HARC. The latter is a long-respected family organization that provides critical services for people like Katie. It was founded by parents like me as a self-help group, at a time when institutionalization was the only choice for help. The splendid people at both these agencies are a blessed lifeline for my daughter and others.”

While every Connecticut resident, and especially every elected official should read the full article, it is easy to understand his core message.

There are useful state services, there are important state services, there are vital state services and then there are essential state services.

The services that Katie and her family receive are truly essential.

These services are essential, not only because we hold ourselves out to be a humane and caring society, but because the cost of respite and day services allow thousands of our fellow citizens to live at home rather than in far more costly institutions.

These are services that government provides because it is the right thing to do.

There are also services that when cut define the notion of being pennywise and pound foolish.

No governor, Democrat or Republican should have cut those services, but Governor Malloy did.

No Legislature, Democrat or Republican should have allowed those cuts to go forward, but Connecticut’s legislature did.

Reasonable people can have reasonable discussions and debates about appropriate levels of taxes and services, but a stunning large number of the cuts in Governor Malloy’s rescission package and the deficit mitigation package that he proposed and the legislature passed with bi-partisan support were not reasonable.

Those cuts passed because few legislators took the time to study the package and fewer still had the courage to stand up and say no to this governor.

Over the next 90 days the Connecticut General Assembly will be reviewing Malloy’s budget proposal for the next two fiscal years.

There is truly no excuse for aspects of what Malloy has proposed and even fewer excuses for the legislature to accept them.

Take a moment to read this father’s piece and  know that it is just one example of budget cuts that have been made or are being contemplated that leave some of our most vulnerable fellow residents without the help and support they so deeply need and deserve.

Government officials will only respond when they know that their constituents will hold them accountable for their actions.

It is essential that our elected officials understand that that is exactly what we are going to do.

You can read the commentary piece at:  http://www.courant.com/news/opinion/hc-op-duffy-who-will-care-for-katie-0303-20130301,0,7996231.story

The State Lottery was for Education; Native Gaming Slots Revenue was for cities and towns…

Feb 12

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Deficit, Taxes Ben Barnes, Malloy, Municipal Aid, Slots Revenue, Tax 2 Comments

Right…The State Lottery was for Education; Native Gaming Slots Revenue was for cities and towns…And if you believe that, I have a bridge to sell you.

In 1993, the Mashantucket Pequot Nation signed an agreement with Governor Lowell Weicker and the state of Connecticut.

In return for the exclusive rights to have slot machines, Connecticut’s Native American Tribes would donate 25 percent of their gross slots revenue to the state of Connecticut.  It was the most generous Native American Revenue Sharing agreement in the nation.

When the Mohegan Sun was opened a few years later, the program became known as the  Mashantucket Pequot/Mohegan Grant.  According to the program description, the fund “annually distributes a grant to each of the state’s 169 municipalities. The distribution is based on numerous factors including, but not limited to, the value of state-owned property, private college and general hospitals, population, equalized net grand list, and per capita income as set forth in Sections 3-55i, j, and k of the Connecticut General Statutes. Payment is made in three equal payments on January 1, April 1, and June 30th.”

In its first full year, about $85 million was distributed to Connecticut’s cities and towns.  The state of Connecticut was a bit short on revenue that year, so it withheld the other $30 million in order to help balance the state budget.

Over the years, as the two Native American casinos became more and more successful, the amount of money flowing into the state coffers grew substantially. 

Some years the state provided its cities and towns a little more money (one year the grant grew to $135 million), but in other years, it cut the grant a bit.  Each time, the excess stayed in the state’s General Fund.

Over the past 19 years, the Native American Tribes have given the state approximately $6.2 billion.  Over that same period, the state has passed on about $1.5 billion or less than 25 percent of the money generated by the agreement.  Connecticut’s state government spent the rest…

In recent years, the state has reduced the Mashantucket Pequot/Mohegan grant even further.

This fiscal year Governor Malloy’s budget allocates only about $62 million to the cities and towns via the Mashantucket Pequot/Mohegan grant program.

But then came last week’s budget proposal from the Governor.

In a major policy shift, perhaps one of the biggest in the entire budget, Governor Malloy has proposed to reduce the Native American grant program to almost zero.  Instead, the Governor’s budget plan has the state borrowing an additional $56 million and giving it to towns to boost their Local Capital Improvement Grants (LoCIP).  The unrestricted Mashantucket Pequot/Mohegan grant would, for all intent, cease to exist.

It is ironic, to say the least, that on the twentieth anniversary of the Native American Slots Agreement, the Governor would run a wooden stake through the heart of what is left of Governor Weicker’s original proposal to allow the Tribes to have exclusive rights to slot machines in return for a “permanent” revenue source to help cities and towns pay their bills and lower their local property taxes.

Malloy presents his blueprint for Connecticut: Record borrowing, cuts to vital services and non-tax tax increases

Feb 06

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Gas Tax, Malloy, State Budget, State Deficit, Taxes Budget cuts, Malloy, State Budget, State Deficit, Taxes 10 Comments

There are a lot of things I don’t agree with Senator John McKinney about, but in this case he is absolutely right. Governor Malloy’s proposed budget is a sham and a shame. It is an embarrassment that a Democrat proposed such an irresponsible budget and the Democrats in the Legislature will need to start from scratch.

As Senator McKinney put it, “”There’s so many gimmicks. I don’t know where to stop…This is the most dishonest budget I’ve seen.”

He is sadly correct in his assessment.

Governor Malloy told the Connecticut General Assembly;

“The budget I am proposing today keeps Connecticut moving forward… [and is] “an honest, balanced budget [that emphasizes] living within our means.”

But, in fact, it is a proposed state budget that;

• Coddles the rich by refusing, once again, to require them to pay their fair share in taxes
• Includes the largest gas tax increases in state history
• Shifts tens of millions in municipal aid to the state’s credit card
• Includes more than $250 million in cuts to vital social services
• Cuts $146 million in state aid for Connecticut hospitals (on top of the $103 million cut)
• Eliminates Medicaid coverage for thousands of poor parents who are now covered by the program that covers their poor children
• Eliminates the Charter Oak Health Plan, an insurance program for those who can’t get affordable healthcare elsewhere
• Reduces the state’s new Earned Income Tax Credit from 30 percent of the federal EITC to 25 percent (retroactive to Jan. 1), thereby removing a portion of the incentive that seeks to keep the working poor working as opposed to going on welfare.
• Creates a new tax on power plants and continues a surcharge on the corporation tax — both of which were set to expire next fiscal year
• Borrows $750 million replace the plan he never implemented to move the state to GAAP financing
• Creates a $631 million state budget deficit in FY16

• And MOST IMPORTANTLY balances the budget by delaying repayment of $1 billion that Connecticut borrowed in 2009 under Gov. M. Jodi Rell.

For more on this absurd plan read:

http://ctmirror.org/story/19035/malloy-avoids-big-tax-hikes-uses-borrowing-social-service-cuts-balance-new-budget

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/budget_increases_spending_9_percent_proposes_radical_changes_to_municipal_f/

http://www.courant.com/news/connecticut/hc-state-budget-20130205,0,746324.story

Malloy’s incredible and stunningly irresponsible budget plan makes an appearance

Feb 06

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes Budget cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes 5 Comments

CT Mirror’s Keith Phaneuf has posted an article outlining the budget plan Governor Malloy will be presenting to the Connecticut General Assembly later today. 

After reading the article, an experienced “Connecticut budget watcher” would be forced to say; “imagine the worst, fiscally irresponsible scenario and then triple or quadruple the negative aspects of the plan” … and you still don’t get to what Governor Malloy will be presenting for the upcoming Fiscal Year 2014-2015 state budget.

Much more will become available as the day goes on, but here are the highlights (or more accurately – low lights) of the Governor’s budget proposal.

While promising a budget that has no new taxes, preserves his education reform program and dramatically expands spending in a few key areas, it is now clear that the Governor’s plans and proposals are virtually completely achieved by adding even more debt to Connecticut – the state that already has the worst existing debt burden in the nation.

Not only does Malloy’s $1.5 billion UConn initiative rely on borrowed funds, but he solves Connecticut’s $1.2 billion projected budget short fall through a complex, even bizarre, borrowing scheme.

The key component of Malloy’s new budget plan relies on getting more revenue from refinancing debt from the last recession, borrowing money to pay for municipal aid that was paid for with general fund dollars in the past and engaging in a new gimmick to make it appear the state is finally moving forward with its shift to Generally Accepted Accounting Principles (GAAP).

In addition, Malloy’s budget proposal raises “about $140 million in new tax revenue by continuing expiring taxes on power plants and other businesses, and by reducing a tax credit for working poor families.

Apparently Malloy’s primary “budget financing plan” includes coming up with an additional $750 million dollars by “delaying repayment of $1 billion Connecticut borrowed in 2009 under Gov. M. Jodi Rell…Originally scheduled to be paid off in the 2015-16 fiscal year, the debt would be extended at least until 2018 in Malloy’s new budget.”

Meanwhile, two years ago, Candidate Malloy promised to immediately move the state to Generally Accepted Account Principles (GAAP).  When Governor Malloy realized the cost of his campaign promise he shifted his plan to make a $75 million down payment in year one, a $50 million down payment in year two and then enter into a 15 year plan to shift the state to GAAP by investing $100 million a year for the next decade and a half.  However, faced with budget deficits over the past two years, Malloy skipped the $75 million payment, then he skipped the $50 million payment and now he will be proposing to borrow the money to shift to state to GAAP, rather than actually make the necessary cash payments to resolve the problem the fiscally responsible way.

In addition, according to this new budget, Malloy will also turn to the state’s already overburdened credit card to provide more municipal aid.  Last year he decided to borrow the funds, rather than pay cash, for the state’s $30 million municipal road aid program.

In this new budget, he is proposing borrowing another $60 million to give towns their Mashantucket Pequot/Mohegan Tribe slot revenue allocations.  In that way, the state could keep all the Native American Indian Gaming funds for itself.

And the most incredible, piece de résistance, is that Malloy’s proposal to increase education funding – the plan he announced yesterday – appears to be paid for by changing (cutting) the Payment in Lieu of taxes program – the grant that towns get for lost revenue from state-owned property.  Malloy’s plan apparently shifts money from the Public PILOT program to the Education Cost Sharing Formula, but calling the funds “NEW MONEY” for education even though the towns aren’t actually getting any additional money.

And as noted above, the CTMirror story suggests that “the governor will propose reducing the state’s new Earned Income Tax Credit from 30 percent of the federal EITC down to 25 percent.”

Finally, the Governor’s plan also re-writes the state spending gap law to allow this increased spending to take place without having to go through the more burdensome supermajority requirements that would otherwise have been needed under the state’s existing spending cap law.

More details to come as Budget Day 2013 progresses.

For the CT Mirror article go to:  http://ctmirror.org/story/19025/malloys-push-avoid-taxes-preserve-education-spurs-more-borrowing

CTNewsjunkie also has additional details at: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/republican_lawmaker_is_not_impressed_with_malloys_budget/

Even on Budget Day – (or especially on Budget Day) – Lobbyist money helps make the world go round…

Feb 05

jonpeltoCampaign Finance, Corporate Viewpoint, Malloy, Power of Incumbency, Prosperity for Connecticut PAC, State Budget, State Deficit, Taxes Campaign Finance, Malloy, Prosperity for Connecticut PAC, State Budget 1 Comment

When Connecticut passed its landmark campaign finance reform legislation, the goal was to remove lobbyist and special interest campaign money from the public policy making process.

But of course, where there is a will, there is a way.

Prosperity for Connecticut Political Action Committee, the PAC affiliated with Governor Malloy has raised over $235,000 in the last 18 months and a nice portion of that money comes from lobbyists who represent a range of clients that will be impacted by Malloy’s budget and policy proposals.

When analyzing the policy initiatives it is often useful to see who has worked to guarantee access to the key decision makers.

The following is list of organizations whose lobbyists have – as the saying goes – ponied up for the Prosperity for Connecticut PAC.

Malloy to present proposed Fiscal Year 2014-2015 state budget on Wednesday

Feb 04

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, Spending Cap, State Budget, State Deficit, Taxes Malloy, Spending Cap, State Budget, State Deficit, Taxes 9 Comments

Connecticut is facing a $148 million budget deficit this year

If the state’s elected officials want to maintain current services, that is adopting a budget that preserves the present level of programs, the state will be facing a $1.2 billion deficit next year.

In addition, a current services budget would mean an expenditure level that is at least $1.2 billion over the state’s legal spending cap.

So what is pushing up state spending?

Andrew Doba, Malloy’s spokesperson, recently told CTNewsjunkie that items forcing the state budget up include, “Medicaid expansion under the Affordable Care Act, fast-growing pension contributions resulting from more prudent assumptions, and our commitment to convert to GAAP.”

Actually, Medicaid expansion under the Affordable Care Act (ObamaCARE) is an extraordinarily small part of the increase in Medicaid spending.  The culprit is the poor economy and growing poverty which are pushing up caseloads. (But it is easier, I suppose, to blame the President)

Second, while pension costs are going up, Malloy’s plan is a drop in the bucket compared to what is needed to properly fund Connecticut’s $22 billion in unfunded state and teacher pension systems, not to mention that they are BELOW what Governor Malloy promised to allocate for those funds.

And third, to blame the conversion to GAAP accounting is beyond absurd.  Candidate Dan Malloy promised to immediately move Connecticut to the path of fiscal honesty by converting the state’s account system to Generally Accepted Accounting Practices. When it became apparent the cost of honesty was “excessive” he proposed making a $75 million down payment last year and a $50 million down payment this year followed by a 15 year program to phase the state to GAAP accounting with a commitment of an extra $100 million a year.

Then, quiet like a mouse, Malloy and the General Assembly skipped the first $75 million down payment, then skipped the second $50 million down payment and the required $100 million initial payment next year is hardly what is causing the $1.2 billion dollar projected deficit.

Then, adding insult to injury, the notion of “balancing the budget” without taxes is simply not true.  Present law already includes the largest gas tax increase in state history that will kick in on July 1, 2014 and Malloy’s budget is certainly going to include the continuation of taxes that were supposed to be eliminated this year.

And meanwhile, those making more than $1 million dollars are still benefiting from the fact that the income tax rate was increased for all middle-income families in Malloy’s $1.5 billion tax increase in 2011, but the rich saw no increase in their income tax rate whatsoever.

And finally, one of the greatest gimmicks of all is already starting to make an appearance.

Connecticut adopted a system of consensus revenue forecasting to remove some of the politics from the administrative branch of government’s desire to look at the world through rose-colored glasses.

The system requires the Office of Policy and Management and the non-partisan Office of Fiscal Analysis to determine what revenue is coming in.

At a press conference earlier today, Governor Malloy announced that an agreement between the State of Connecticut and Amazon had been reached that will require Amazon to collect sales tax from Connecticut residents and send the funds to the Commissioner of Revenue services.

When asked how much is expected from the agreement, Malloy announced that it would come to an extra $15 million a year and that the funds had already been built into his proposed budget.  Malloy said he’d gotten the number from Amazon.

The problem, the Office of Fiscal Analysis, in its official capacity, already projected that the state would get about $9 million from a bill that required Amazon to collect the sales tax and send it on to the state – and that was before this most recent dip in economic activity.

But instead of using the more conservative, and legally appropriate fiscal impact number, or even a number developed through a consensus between his Office of Policy and Management and the Office of Fiscal Analysis, the Governor used an unconfirmed amount AND built the artificially higher number into his proposed budget.

We haven’t even gotten to budget day and already the governor is announcing assumptions that are designed to inaccurately explain away the problems and gloss over the realities of the fiscal crisis that continue to grip our state.

Yet again, fiscal reality is being pushed aside by political expediency.

Quick! Look Busy, Set up a Sandy Hook Advisory Commission to Study the Problem

Jan 03

jonpeltoBudget Cuts, Democratic Legislators, Human Services, Malloy, Mental Health Services, Public Health, State Budget, State Deficit, Taxes 5 Comments

A couple of hours ago, Gov. Dannel P. Malloy announced that he was creating the Sandy Hook Advisory Commission, a committee of 15 members who will “explore relevant issues of gun control, school security and mental health.”

The governor named Hamden Mayor Scott Jackson to lead the committee and instructed him that an initial round of recommendations are expected no later than March 15, which would give the Governor and the General Assembly about three months to decide whether to turn any of the ideas into law before the end of the 2013 legislative session.

According to a story posted on the CTMirror website, “No other commission members were identified, but Malloy said they will include experts in education, mental health, law enforcement and emergency response. All are outside state government, but Michael Lawlor, the governor’s adviser on criminal justice issues, will staff the panel…Lawlor said the governor’s office has identified and invited the other commission members, but it is awaiting acceptances by the entire group.”

Meanwhile, yesterday, Connecticut’s Healthcare Advocate Victoria Veltri released a comprehensive report on access to mental health and substance abuse treatment services in Connecticut.

The 60 page report, entitled, “Findings and Recommendations: Access to Mental Health and Substance Use Services” began with the observation that;

“Eight years after the Report of the Governor’s Blue Ribbon Commission on Mental Health, residents of Connecticut still face significant barriers to access to preventive and treatment services for mental health and substance use disorder in Connecticut. The tragedy of the mass shootings in Newtown, CT. on December 14, 2012, brings the need for such an effort into sharp relief. Health insurance coverage is not a promise of coverage. Multiple state agencies with varying eligibility requirements provide services and/or oversight for residents struggling with mental health and substance use disorders, but these efforts are not well understood or coordinated as part of an overall vision for the state.”

Let’s be clear.  There is nothing wrong with a Governor bringing together a group of “experts” to “explore relevant issues of gun control, school security and mental health.”

But the juxtaposition between yesterday and today could not have been starker.

Last year, as part of Governor Malloy’s $1.5 billion tax package, income tax rates went up for Connecticut’s middle-income families, but they were frozen and did not go up for those making more than $1 million dollars – despite the huge windfall the wealthy had been receiving for a decade as a result of the Bush-Obama tax cuts.

The state’s overall lack of sufficient revenues translated into a $415 million budget deficit in this year’s budget.

As part of his effort to balance the state budget in November, Governor Malloy made the maximum allowable budget rescissions (cuts) to a number of Connecticut’s important mental health programs including Mental Health Center (a cut of $433,286), Grants for Substance Abuse Services (a cut of $1,246,477), grants for Mental Health Services (a cut of $3,823,794) and funding for Employment Opportunities for those with mental illness or substance abuse problems (a cut of $523,504).

Then a few weeks later, Malloy’s budget deficit mitigation bill, that passed the State House and State Senate, cut an additional $578,387 in funding for staff at the Department of Mental Health and Abdication Services, cut $739,682 for housing programs for clients served by the mental health agency and cut 846,304 in other managed services for those with mental health or addiction problems.

And that doesn’t even count the nearly $3 million in cuts to housing and care for children in foster care, for children in residential facilities and for individualized support programs for families with troubled children.

Had Malloy and the Democrats simply stopped coddling the super-rich and, in turn, required them to start paying their fair share in income taxes starting January 1, 2013, none of those cuts would have been necessary.

But here we are, first came cuts to vital services and now the announcement of a new Sandy Hook Commission.

Let’s reiterate the point.  Any and all efforts to develop and promote better public policies are a good idea, but the report that Connecticut’s Health Care Advocate released yesterday reiterated that there experts already know that there are proven strategies to increase support for persons with mental illness but that this governor (and previous governors) have failed to implement those vital programs.

As reported in yesterday’s CTNewsjunkie story about the report, parents at a recent public hearing on access to mental health issues “told heartbreaking stories…about their attempts to get services for their children. Their testimony showed that the state ‘has a fractured and fragmented method of delivering care that needs to be coordinated and more data driven in terms of cost effectiveness.’”

In fact, the Connecticut Healthcare Advocate’s report included eight major recommendations about techniques to improve Connecticut’s mental health and substance use systems.  Those recommendations include;

1.  Connecticut should adopt an overall vision for health that integrates and coordinates access to effective, timely, high quality and affordable mental health and substance use prevention and treatment services into overall healthcare

2.  Connecticut’s mental health and substance use delivery system should be synchronized by n coordinating entity

3.  Prevention, awareness and screening programs must be enhanced

4.  Residents covered by self-funded and fully-insured plans should have access to community-based services

5.  Mental Health Parity and Addiction Equity must be enforced

6.  The recommendations of the 12/18/12 Program Review and Investigation Committee report should be adopted in full

7.  State programs must be evaluated for cost effectiveness, and should be streamlined

8.  Cost shifting to the state should be evaluated and minimized.

As Connecticut’s Healthcare Advocate Veltri explained, “Now, more than ever, action is required to address the obstacles to access to treatment for and prevention of mental health and substance use conditions. Connecticut lacks an overall vision of delivery services to all of our residents.”

When one looks back over the past two days, it seems the single most important observation and recommendation went unsaid.

While a Sandy Hook Commission may make political sense and can even add to the policy debate, the sad truth is that Governor Malloy and the Legislature failed to put action behind their words when they made mental health services a target for deep and debilitating cuts.

For more background on this issue, the Connecticut Health Care Advocate’s Report can be found here:  http://www.ct.gov/oha/lib/oha/documents/publications/report_of_findings_and_recs_on_oha_hearing_1-2-13.pdf

CTNewsjunkie’s article on the report here: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/report_calls_for_action_on_fractured_mental_health_system/

And the latest from the Governor on his new Sandy Hook Commission is up on CTMirror, here:  http://ctmirror.org/story/18620/malloy-outlines-broad-approach-newtown-shooting

“Despite these challenges, Governor Malloy is committed to…NO tax increases.”

Nov 28

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Gas Tax, Malloy, State Budget, State Deficit, Taxes Barnes, Gas Tax, Malloy, State Deficit 10 Comments

Oh, yeah, ah….

Except for that 4 to 8 cent gas tax increase that is already scheduled to kick in on July 1^st 2013. (And well, maybe a few other efforts to enhance revenues).

Ben Barnes, Governor Malloy’s budget chief addressed the General Assembly’s revenue and spending committees yesterday about this  fiscal year’s $365 million deficit and next year’s projected $1.2 billion shortfall.

Much of the discussion surrounded Malloy’s position on increasing taxes and the meaning of a PowerPoint presentation that Barnes’ provided that included a slide that read;

“Despite these challenges, Governor Malloy is committed to:

• Ensuring the state lives within its means.
• Hard spending cuts.
• NO tax increases.”

Apparently the “NO tax increases” wasn’t meant as “a statement of fact.”

Republican legislators wanted to know if the Malloy Administration was going on record saying that the Governor would not propose any tax increases to address the growing state deficit.

OPM Secretary Barnes responded with phrases like, “I have no intention” of raising taxes, but added, “I’m not going to make an absolute promise…”

Barnes also side-stepped questions related to what the CTMirror described as “a myriad of other revenue-raising scenarios that some might argue are equal to a tax increase.”

Thanks to President Bush #1, the concept of “No New Taxes” is indelibly ingrained in the American political lexicon.

But of course, at least one of the elephants in the room is the major tax increase that is already built into the Connecticut state budget.

As the result of the upcoming increase in the state’s wholesale tax on petroleum, the price of a gallon of gas will go up 4 to 8 cents on July 1^st, in addition whatever other prices increases are coming as a result of “market pressures.”

Why?

Connecticut has two gas taxes.  In addition to the standard gasoline tax of 25 cents that is collected at the gas pump, Connecticut drivers are paying another 22 cents a gallon due to the state’s wholesale petroleum tax, which is collected when the gasoline arrives at the wholesaler.

Under present law, the state collects an effective tax rate of 7.53 percent on the wholesale price of gasoline.

Last year, the legislature placed a one year cap on that tax so that it would not exceed 22.6 cents.

However, the wording of the existing state statute is that the cap comes off on July 1, 2013 and the tax rate increases to 8.81 percent.

At today’s prices, this will boost the price of a gallon of gas by about 4 cents.  If gas prices return to their previously high levels, the tax would add as much as 8 cents to the price of a gallon of gas.

This 17 percent increase in the petroleum gross receipts tax will bring in about $50 million at today’s gas prices.

Back in 2005, when Connecticut adopted its present transportation infrastructure initiative, the original tax increases in the wholesale tax were sold as part of the mechanism to fund the transportation improvements.

Since then, the wholesale tax increases in 2005, 2006 and 2007 have brought in close to $2 billion dollars.  However, about 60 percent of that money has been used for general fund expenses rather than transportation related costs.

Considering the magnitude of the budget deficit facing Connecticut, and Governor Malloy’s previous efforts to reduce expenditures for transportation initiatives, taxpayers can certainly expect that the additional $50 million the July 2013 increase will bring in will be used to cover the deficit rather than for its intended purpose.

For more on Malloy’s “NO tax increases” position, check out CT Mirror at http://ctmirror.org/story/18288/lawmakers-press-malloys-budget-chief-clarify-position-taxes, CTNewsjunkie at http://www.ctnewsjunkie.com/ctnj.php/archives/entry/barnes_takes_no_pleasure_in_cutting_spending/, CT Post at http://www.ctpost.com/news/article/Conn-lawmakers-scrutinize-1-2-billion-deficit-4071541.php

Dan Haar also has an excellent assessment of the situation here: http://courantblogs.com/dan-haar/state-budget-crisis-2013-16-nowhere-to-hide/

Could Connecticut’s state deficit really jump from $60m to $365m in a month? That would be a No

Nov 21

jonpeltoBen Barnes (OPM Secretary), Budget Cuts, Malloy, State Budget, State Legislature, State Politics, Taxes Ben Barnes, Malloy, State Budget, State Deficit 9 Comments

According to Connecticut law, by the twentieth day of each month, the Governor’s Office of Policy and Management must provide the Office of the State Comptroller with a statement of “revenues and expenditures for the General Fund.”

Using this information, and his own budget experts, the State Comptroller then produces the state’s official financial statement that is released on the first of each month.

A couple of weeks before the election, OPM reported that the projected deficit was $60 million.

A couple of weeks after the election, OPM reported that the projected deficit was $365 million.

As to the question of whether a state deficit could leap from $60 million to $365 million in thirty days, the answer is a simple and resounding – “No.”

So what is going on?

On October 19, 2012, Ben Barnes, Governor Malloy’s budget chief, wrote to State Comptroller Kevin Lembo to report, “We are projecting the General Fund will experience…a $60.1 million shortfall on a budgetary basis, a change of $33.2 million from last month.”

Now, thirty days later, OPM Secretary Barnes, in his monthly letter to State Comptroller Kevin Lembo, is observing that the projected budget deficit is actually six times larger than he had projected, only a month ago.

Now Barnes is reporting that state revenues are down ANOTHER $144.9 million, including $100 million in “unexpected refunds” of income and corporation taxes.   OPM lowered the amount the state is expected to collect from the corporation tax by $51.8 million and the amount that will come in from the state sales tax by $43.7 million.

Even more enlightening is that whereas OPM alluded to the fact that it will probably spend $100 million more than expected on health care costs for poor, Medicaid recipients, the letter Barnes sent to Lembo yesterday reports that the Malloy Administration will spend at least $294.1 million MORE than the amount allocated in the state budget that was passed by the Legislature and signed into law by the Governor.

The number is at least $160 million more than OPM projected last month.

Tens of millions of dollars in excess spending is related to costs in non-Medicaid spending, including cost over-runs in the Department of Corrections, the Department of Emergency Services and Public Protection and in other state agencies.

It would appear that some of these higher costs are related to excess personnel costs meaning that Malloy Administration knew for quite some time that payroll costs were going to exceed what had been budgeted for those agencies.

Last week, Governor Malloy and his advisers sought to dismiss any criticism by suggesting that State Representative Larry Cafero, the Republican leader in the House of Representatives, was merely trying to score political points by criticizing the Administration’s handling of the budget.

However, Malloy and some in the media, who simply run with that story, are doing a tremendous disservice to the truth.

While Cafero may very well be attempting to score political points, after all, he is a politician and the political leader of the opposition party; the issues he is raising are legitimate.

In fact, if the tables were turned and it was a Republican Governor announcing massive budget deficits, the Democrats would be calling for legislative hearings and some would even be suggesting that Administration Officials be called to testify, under-oath, so that the Legislature could determine who was involved in the effort to cover-up the magnitude of the budget problems leading up to the election.

The budget analysts who work for the Office of Policy and Management, the State Comptroller and the Office of Fiscal Analysis are some of the most talented people in their field.  There is absolutely no question that some of these experts understood the magnitude of the budget problem.

The unanswered question is not whether the professional staff within state government understood that the budget crisis was getting worse, but why those in more political positions chose to withhold the information from the public.

CT Newsjunkie has the latest at: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/barnes_confirms_365m_deficit/ or you can read OPM Secretary Barnes’ letter to State Comptroller Kevin Lembo at http://www.ct.gov/opm/lib/opm/budget/comptrollerletter/fy2013/2012nov20comptrollersletter.pdf

Are we winning yet? A 365 million deficit this year, $1.1 billion shortfall next year…

Nov 18

jonpeltoMalloy, State Budget, Taxes Malloy, State Budget, Taxes 3 Comments

Last year, Governor Malloy raised income taxes only on those making less than $1 million.  He left the wealthy completely untouched when it came having to pay higher income rates.  Last week he reiterated his commitment to no new taxes.

So when it comes to equity, where do we really stand?

In Connecticut, since the mid-1990s (adjusted for inflation);

Income for the wealthiest 20 percent has INCREASED by 17.2%

Income for the middle 20 percent has INCREASED by 2.5%

Income for the poorest 20% has DECREASED by 9.8%

And note that this is post-federal tax income and does include the value of the Earned Income Tax credit, the value of food stamps and any housing subsidies.

Meanwhile, the richest 5 percent of Connecticut households now have incomes 5 times larger than the middle 20 percent and 14 times larger than the poorest 20 percent.

More to come about a new report on income inequality from the national, non-partisan, Center on Budget and Policy Priorities and the Economic Policy Institute.