Oh, yeah, ah….
Except for that 4 to 8 cent gas tax increase that is already scheduled to kick in on July 1st 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 1st, in addition whatever other prices increases are coming as a result of “market pressures.”
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/