Mileage Tax: Why Spend Money on Something Nobody Wants?

And Why Didn’t the DOT Tell Us?

July 15, 2016

 

There has been quite a lot of coverage lately about Connecticut’s interest in a mileage tax. Most of it focuses on how bad a mileage tax would be for the state. I agree, it would. People in Connecticut just can’t take on one more tax, and on top of that, a mileage tax raises too many privacy issues. But I don’t think that’s what the real story is.

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The story is really about trust, transparency, and inappropriate use of scarce resources. Connecticut isn’t just joining other states to ask for federal money to study the mileage tax: it has actually committed to spending taxpayer dollars and to playing a lead role in the study should the grant be awarded. This is something the public needs to know.

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In 2015, when the governor’s Transportation Finance Panel suggested that a mileage tax might be a viable course to pursue, legislative leaders from both parties made statements unequivocally opposing it, and the public displeasure was equally pronounced. This made the recent news of the grant application very surprising.

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Many state lawmakers and the general public first learned about the application in a June 25 story in the Washington Post. The application was submitted by the Delaware Department of Transportation (DOT) on behalf of the I-95 Corridor Coalition, a consortium of 16 states. It proposes pilot programs in five states – Connecticut, Delaware, New Hampshire, Pennsylvania, and another to be determined – designed to learn more about implementing “mileage-based user fees”. The proposal includes developing model legislation.

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The program’s estimated cost is $2.98 million. The application requests half that amount, $1.49 million, in federal funds, with individual states providing the rest in matching funds.

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With a commitment of $300,000, Connecticut would pay more in cash than any other state. Delaware and Pennsylvania would each pay $290,000, and Vermont $30,000, for planning and analysis. Instead of cash, New Hampshire would use $580,000 in toll credits. Eleven of the consortium’s 16 states have no active role in the program.

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When asked by the Connecticut media to explain the state’s role in the grant application, the DOT spokesperson said that Connecticut had no plans for implementing a mileage tax, but that the DOT had an “obligation” to seek federal funds for studies in order to do its job better. He said nothing about spending taxpayer money to get those funds or about leading the pack. Those details appeared only in the grant application, which is available online, although hard to find.

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There is overwhelming opposition to the concept of a mileage tax. Moreover, essential services are being cut because the state’s budget is stretched beyond its limits. Under those circumstances, why was it so critical for the DOT to make these commitments? As a member of the consortium that submitted the application, Connecticut would presumably have access to the pilot program’s results, so why was it necessary to be a lead participant, especially in the face of such broad opposition?

As a Ranking Member of the Appropriations subcommittee that oversees the DOT’s budget, I was not officially informed about the proposed financial commitment, and I have sent a letter to DOT Commissioner James Redeker requesting responses to these questions and others. I will share whatever information I receive.

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I don’t believe there is a mileage tax in Connecticut’s near future, if for no other reason than that it’s a complicated and controversial undertaking, and, fortunately, no one seems to be even close to figuring out how to implement it. But I am extremely concerned about how the decision was made to pursue this study and to commit scarce and needed dollars to something that taxpayers and their representatives overwhelmingly oppose.

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The clear message here is that the executive branch is determined for Connecticut to lead in studying the mileage tax concept, regardless of what taxpayers and their General Assembly representatives think about it. The proper course of action is for the DOT to withdraw its commitments from the grant proposal, and to improve the transparency of its communications with the legislature and the public.

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What in the World Is Going On in Hartford?

April 25th, 2016

 

For the past few weeks, it seems like a new piece of distressing budget-related news has been coming out of Hartford at every turn. This shouldn’t be surprising, given the glaring weaknesses of the biennial budget (FY 2016 and FY 2017) passed by majority legislators last spring, which fell into deficit right after it took effect. Still, that doesn’t make the newsflashes any less distressing.

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Since the end of last year, budget movements for both 2016 and 2017 have behaved like a yo-yo, falling and recovering over and over against the dark backdrop of a projected $4.5 billion deficit for the 2018-2019 biennium. Without a lifeline of profound structural changes – like public-sector labor reforms and borrowing and spending caps — Connecticut’s fiscal crisis is growing deeper every day, and the threats of even higher taxes, exiting businesses, diminished critical services to the needy, and deteriorating infrastructure loom ever larger.

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Major deficits used to emerge perhaps once or twice a year. Now, however, even after two massive tax increases, the deficit alarm is sounding almost every month.

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With so many rapid-fire developments happening, it may be difficult to keep them straight. So I’d like to share with you below: 1) A timeline of recent budget events, 2) A look at what’s next, and 3) A review of possible outcomes.

Budget issues have by necessity dwarfed most other matters during this legislative session. As always, please don’t hesitate to contact me if you would like to discuss these, or any other issues, further.

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Recent Budget Timeline

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Last December. The current FY 2016 budget deficit, which had appeared several months before, reached approximately $350 million. On December 8, the legislature passed a bill closing that deficit. While both parties worked together on the bill, Republicans voted against it, because it included no long-term structural changes designed to halt the state’s perpetual deficit cycle.

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December – February. The projected deficit for 2017 grew to about $550 million.

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February 3. Following the usual procedure for providing guidance to the legislature, Governor Malloy presented a budget adjustments proposal for FY 2017. It addressed the full projected $550 million deficit for 2017.

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January – March. The current FY 2016 budget once again began running a deficit, which grew to $220 million.

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March 29. The legislature passed a bill closing the 2016 current $220 million deficit. Again, both parties worked together on the bill. This time both parties voted in favor, because with this short-term measure designed only to balance the budget for three months, the Republican requirement for long-term structural changes was not on the table for negotiation.

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February – April. The projected 2017 deficit grew to $930 million.

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April 6-7. Majority legislators of both the Appropriations and Finance Committees each introduced and passed passed 2017 budget adjustments bills. They did not, however, address the full $930 million projected deficit, leaving the 2017 budget almost $400 million out of balance. Republicans voted against both bills.

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April 12. Stating that the majority’s budget adjustments legislation was incomplete, the governor, in a rare move, released a second proposal that addressed the entire $930 million projected deficit.

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April 20. The administration reported that a new $141 deficit had appeared in the current FY 2016 budget.

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April 21. In another rare move, majority legislative leaders announced that they would produce a new 2017 budget and call it for a vote without further input from the governor.

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What’s Next

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By April 29. Revenue tallies following April 18 due date for taxes will be available and may reveal further shortfalls. This would affect both the 2016 and the 2017 budgets.

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May 4. The 2016 legislative session ends.

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July 1. The 2017 fiscal year begins.

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A Few Possible Sequels

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• Scenario. After the April revenue totals are calculated, the legislative majority produces a new 2017 budget adjustments bill and calls it for a vote before the session ends at midnight on May 4. The governor signs the bill in the coming days, balancing the 2017 budget if not in reality, at least temporarily and on paper.

• Scenario. The governor vetoes the budget adjustments bill passed by the legislature. The 2017 budget enacted in the spring of 2015 remains in place with an approximately $1 billion deficit, and the whole budget adjustments process is strung out indefinitely.

• Scenario. The legislative majority does not finish its new 2017 budget adjustments in time and does not call for a vote on a budget bill before the session ends. Here too, the enacted deficient 2017 budget remains in place and the budget adjustments process is strung out indefinitely.

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Many in Hartford have suggested that legislators currently in the majority who prefer further tax increases to structural reforms, but are unwilling to propose new taxes in an election year, may favor waiting until November to balance the 2017 budget.

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GE: What We Didn’t Hear Last Week, and Should Have

January 19th, 2016

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We heard a lot about GE last week. But what we didn’t hear was more telling.

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In Connecticut, we heard much discussion of why GE decided to move, and many opinions about who and what are to blame. None of this was surprising, and much of it had to be said.

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More disturbing, however, has been the drumbeat of negative coverage by the national media, which culminated this week in a Wall Street Journal article entitled, “GE Escapes Connectitax: The company flees the high-tax state that hates business”. While the title is particularly acerbic, the article can’t be dismissed as merely a reflection of one paper’s bias. The Hartford Courant has been equally outspoken. So has much of the national broadcast media.

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Whatever the reason for GE’s decision – tax policy, other financial and regulatory issues, lack of a dynamic urban setting, or, most likely, a combination of all of these — Connecticut has now acquired a reputation as a place where businesses are punished, undervalued, and even vilified, and policy makers aren’t interested in changing course.

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While opinions vary on whether this perception reflects reality, many in the business community, both in and outside Connecticut, unfortunately now believe it does.

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The consequence for Connecticut is undeniable: businesses that might consider moving or expanding here will be more and more reluctant to do so, and many of those already here will increasingly doubt the wisdom of staying.

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Effective leaders in similar situations often display a frank willingness to look inward, recognize that there’s a problem, and communicate an action plan to address it. This is, for example, what ad agency chiefs do when they lose a high-profile account; what nonprofit board chairs do when a loyal donor exits; what major league coaches do when their team is on a losing streak. They do it to show the market that they’re still in the game, and to reassure clients, donors, and investors that they value their allegiance and are determined to keep it by improving their performance.

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It’s hard to imagine a leader in one of these situations saying, “This is a sign that we should continue doing what we’re doing.” But that’s what happened in Connecticut last week.

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Legislative majority leadership simply denied the existence of a problem. One quote: “It is an undeniable fact that Connecticut’s economy is growing and creating jobs and we are training our workforce to compete in a global economy.” And another: “It is clear that GE’s decision has nothing to do with taxes, or even business costs, and cannot fairly be viewed as a referendum on Connecticut’s growing economy.”

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The response from the executive branch acknowledged that GE’s news was disappointing, and then explained that the state’s policies have been moving in the right direction. The statement that “Today’s decision is a clear signal that Connecticut must continue to adapt to a changing business climate,” was followed by a list of things the state is already doing.

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Where was the recognition of possible deficiencies? Where was the willingness to look inward and examine how closely current policies correspond to what businesses expect? Where was the plan for what might constructively change going forward or the invitation to businesses to help develop it?

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Of course no statement would have changed GE’s decision after its announcement. The point is that last week’s communications are a clue to the bigger picture of what’s behind negative perceptions of Connecticut, and may help explain, even to those who still believe the state is sufficiently business friendly, why its reputation is under fire.

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What we didn’t hear last week is the latest example of what businesses have been missing for several years: serious attentiveness to their concerns, recognition that major policy changes are necessary, and a partnership mentality that embraces businesses of all sizes instead of a putting-out-fires approach that targets a select few. Instead, what businesses heard, and have been hearing all along, was that Connecticut’s leadership is determined to pursue its agenda without regard for what business decision-makers think of it.

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This is a message that could suck the lifeblood out of any economy. The business disaffection it has spawned is hurting everyone in Connecticut.

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The Budget Special Session: Using a Bucket when
You Need to Fix the Leaky Roof

December 11th, 2015

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When you have a leaky roof, you can’t fix it with a bucket. You have to stop the leak at its source. Otherwise, the bucket spills over, and the leak in the roof gets worse. Nevertheless, majority lawmakers took the bucket approach to dealing with our state’s persistent and burgeoning budget problems in Tuesday’s special session.

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The governor called us into special session because the budget passed by the majority last June had immediately fallen into deficit. Growing at a rate of about $100 million per month, the gap had widened to $357 million. On top of that, the legislature’s nonpartisan budget office projected a deficit of more than $4 billion for the next three years.

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The budget, which hardly anyone really liked, had ushered in the second largest tax increase in Connecticut’s history, increased spending by 7% based on overambitious revenue projections, raised taxes on the middle class and the working poor, angered GE and other iconic businesses, and burdened hospitals with new tax hikes, while allowing a $350 million state employee wage increase.

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At first, Governor Malloy used his rescission authority to try to close the deficit with cuts to hospitals and programs for the intellectually disabled, the mentally ill, and substance abuse treatment. But when the deficit kept growing, and pressure mounted from thousands of people, hospitals, and nonprofits upset by the cuts, and from businesses and residents upset by the taxes, he finally called for bipartisan talks aiming for a special session on measures to address the problem.

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Lawmakers from both parties and the governor agreed on the size of the deficit, modest business tax rollbacks, and partial restoration of the cuts to hospitals and social services. Despite good-faith efforts from all sides, however, lawmakers were unable to agree on long-term measures that would halt the endless deficit cycle.

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Ultimately, during the special session, majority legislative Democrats introduced a bill that included the business tax rollbacks agreed upon by both parties but took the “bucket” approach to the deficit, stopping short of making significant long-term reforms. In a move that could provide only temporary relief, almost 40% of the funds used to close the gap were diverted from off-budget funds and one-time sources. The bill passed without a single Republican vote in either chamber.

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Republicans did, however, provide and vote for an alternative, in an amendment based on the proposal we had brought to the bipartisan negotiations. Our proposal included the bipartisan business tax rollbacks, eliminated cuts to social services, including all of the hospital cuts, closed the current deficit, and included a package of long-term structural measures that would prevent future deficits.

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Our long-term initiatives included:

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• Implementing the constitutional spending cap

• Imposing an annual cap on state bonding

• Opening a competitive bid process for the Corrections Department’s $92 million healthcare plan

• Introducing many labor reforms, including increasing state workers’ contributions to their pension and healthcare plans, suspending longevity payments, and calculating final average salaries by using base pay only

• Requiring the legislature’s approval for all state employee contracts

• Enacting a constitutional lockbox for transportation funds

• Revising prevailing wage laws to help municipalities control their costs

• Shifting services from the Connecticut Juvenile Training Center to community nonprofits

• Combat out-of-control overtime costs by requiring regular reporting and monitoring.

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For a detailed outline of our proposals, click here.

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If Connecticut continues to take the “bucket” approach to budgeting, with piecemeal fixes, its massive deficits will persist year after year, while its overhead costs continue to rise. Faced with increasing tax pressure, more people and businesses will leave the state, jobs for skilled professionals will become more scarce, and services for the state’s neediest residents will deteriorate. I will continue to fight for the long-term structural reforms we need to restore stability and predictability to our economy, and rebuild the confidence of businesses and residents in Connecticut as a place to live, work, and retire.

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State Budget Cuts: Something is Wrong with this Picture

September 29th, 2015

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On September 18, Governor Malloy ordered $103 million in cuts to the state budget, which had taken effect just three months previously. As reasons, the administration cited downward revisions in projected revenues due to unexpectedly low tax receipts and stock market weakness. In other circumstances, the rescission order might look like reassuring fiscal prudence. Instead, it looks more like eleventh-hour backpedaling on a budget that was unworkable to begin with, and it has caused genuine alarm.

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Two-thirds of the cuts, or $64 million, are reductions in Medicaid spending that directly affect hospitals. Their impact is much greater, however, because the reductions mean a loss of $128 million in federal dollars. The result is a total loss of $192 million in funding for Connecticut’s hospitals. The Western Connecticut Health Network (WCHN), which includes Norwalk, Danbury, and New Milford Hospitals, will take a $14 million hit, of which $6.3 million falls on Norwalk Hospital alone.

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These cuts are actually greater than those proposed last February by the governor and then adamantly rejected by legislators of both parties. They come while hospitals are already coping with a tax imposed four years ago as part of a scheme to bring more federal Medicaid funding to the state. Although they were supposed to receive a net gain from the arrangement, hospitals have seen their taxes grow exponentially. This month’s cuts also come at a time when hospitals already have their budgets set, making strategic planning almost impossible.

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This is far from just a financial issue, because Medicaid cuts affect the state’s most vulnerable populations directly. That’s a lot of people: one of five in Connecticut are on Medicaid, and of those, 25% are children. The Connecticut Hospital Association has said that the new Medicaid cuts will lead to staff reductions, longer wait times for patients, and an inability to invest in low-cost preventive services Medicaid patients need to stay healthy. According to John Murphy, CEO of WCHN, the worst consequence is that people who can’t afford basic healthcare won’t seek it, and will “carry their burdens quietly” as their health deteriorates. This isn’t a scenario that anyone wants.

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While the recent rescissions hit hospitals the hardest, they also substantially cut funding for services to the intellectually disabled, to the mentally ill, and to substance abuse programs, as well as to education.

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Something is very wrong with this picture. Why are critical services for our most vulnerable residents being cut while state employees are receiving $350 million in raises and fringe benefits that outstrip any available in the private sector? Why, after the two largest tax increases in the state’s history, are residents paying so much more while government services are getting worse? Why is there a willingness only now to acknowledge that a projected 7.1% increase in personal income tax revenues was an unrealistic and shaky foundation for the current budget – especially when Connecticut relies so heavily on volatile investment income?

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That these questions persist makes it clear that the state budget is plagued by serious issues with spending priorities, sustainability, and fiscal responsibility. Introducing widespread cuts on an ad hoc basis every few months, as the administration has done recently, not only hurts residents, but also doesn’t address the budget’s structural problems. In fact, if nothing fundamental changes, the state will show a deficit of more than $1 billion in fiscal 2018, the first year following the current budget cycle.

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The situation is serious, but it can be reversed if the will is there. I have joined House and Senate Republican colleagues in calling for a special session to put everything on the table – particularly the state’s labor costs, which represent 35% of the budget – to restore the new cuts, and to initiate long-term budget reforms with all due urgency.

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There’s also a more direct alternative. The authority to negotiate the state’s labor agreements lies with the executive branch. House Minority Leader Themis Klarides has asked Governor Malloy to discuss concessions with the state employee unions, and nothing could be more timely. This would be the most direct route toward both establishing a sound, long-term fiscal foundation for Connecticut and ensuring that critical services are preserved.

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Reshuffling the State’s Taxes Is Not a Solution

September 18th, 2015

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This week I attended the public hearing in Hartford held by the State Tax Panel and submitted testimony.

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The bipartisan Panel was created by 2014 legislation to focus on the state’s long-term tax policy. Any recommendations it makes for reforming our tax system are supposed to be revenue-neutral: no tax can be reduced without replacing it with money from another source.

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The State Tax Panel’s members have a challenging task. Unless the legislature is willing to support major reductions to state employee fringe benefits and a number of other reforms, it is difficult to see how they can make changes to our tax system that will improve the state’s finances and expand our tax base. Otherwise, they will be limited to replacing one tax by another – just reshuffling the state’s fiscal cards.

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In the wake of the two recent historic tax increases, the fiscal distress of Connecticut’s people and businesses is real. This summer, GE’s statements and plans have received prominent statewide and national coverage, and whether GE stays or goes, this will have affected Connecticut’s reputation as a place to do business.

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But Connecticut is a great state, and the financial, economic, and infrastructure problems it is facing can be fixed. Significant reform of its tax policies is an important step toward that goal.

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In my testimony, among the suggestions I made – while insisting that reducing the state’s contractual obligations must be on the table — were several aimed at:

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• Reducing taxes for retirees to make staying in Connecticut more feasible

• Making the state more business-friendly by adopting a long-term, competitive tax structure for all businesses across the board and offering initial tax breaks to all businesses considering a move to Connecticut

• Reducing pressure on local property taxes by curbing state mandates like prevailing wage laws.

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To read my full testimony, click here.

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Education: Bipartisan Collaboration Yields Results

August 17th, 2015

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During the 2015 legislative session, I had the privilege of serving for the first time as Ranking Member of the General Assembly’s Education Committee. One of the legislature’s largest committees, its work affects every community in the state. While education should not be a partisan subject, the committee’s work has sometimes been affected by political differences in past years. This year, however, I was pleased that building a good working relationship with the committee co-chairs and drawing on the knowledge of a particularly strong group of members helped us find many areas of common ground and pass a range of bills with full bipartisan support that should have a positive impact on our state’s K-12 education system.

 

The new laws address a wide variety of issues:

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• Literacy. To address what I believe is the issue most critical for our school system’s progress, early literacy, the State Department of Education must create the position of Director of Reading Initiatives to oversee all literacy programs statewide, and most particularly reading in grades K-3.

• Mandate relief. I was very pleased by progress in this area, where I have been pushing for change for several years. School districts may now apply to the Education Commissioner for waivers from costly and unwieldy mandates by proposing innovative ideas to replace them. A key goal is for successful waivers to lead to further mandate relief legislation. Another new law affects the Minimum Budget Requirement (MBR), which restricts districts from budgeting less in any year for education than in the previous year. The new law gives school boards more flexibility to control their budgets by loosening the MBR restrictions for many districts with declining enrollment, and eliminating them altogether for the highest-performing districts.

• Testing and student assessments. Starting with the 2015-16 academic year, the SAT will replace the SBAC test for all eleventh-graders in Connecticut. The objectives: reducing students’ stress, increasing their learning time in the classroom, and, since the SAT will now be free, making college accessible to more students. A Mastery Examination Committee will also address the question of how much and what kind of testing is appropriate in other grades.

• Helping students with dyslexia. Teacher preparation programs must now include comprehensive training in identifying and addressing dyslexia. The State Department of Education must also designate a staff member to help parents and schools identify and provide appropriate interventions for students with dyslexia.

• Reciprocity for teachers. To ensure that qualified teachers are available statewide in shortage areas like bilingual education, it will now be easier for out-of-state teachers to obtain certification in Connecticut. The new law also requires more active recruitment of minority teachers and teacher training in cultural competency.

• Charter schools. Serious management problems at one charter school organization led to a proposal for a long moratorium on opening any new charter schools. Working collaboratively, we crafted legislation that significantly strengthens charter school oversight and requires the State Department of Education to develop a cohesive plan for creating new charter schools, but imposes no delays on opening new ones. The new law raises standards for management and transparency, while preserving school choice in the communities that need it most.

• Student health and safety. To improve students’ protection from abuse and neglect, a new law increases reporting and training requirements for school employees who are mandated reporters. Another new law expands care for students with seizure disorders by allowing specially designated and trained school employees to administer emergency medication when the school nurse is absent or unavailable.

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While these new laws provide important improvements to our education system, there is still much work left to do – for example, in closing Connecticut’s achievement gap, meeting growing needs for special education, and addressing funding inequities for communities like Norwalk and Stamford. During the next session, I also look forward to revisiting and improving the student data privacy legislation that we came very close to passing this year.

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As we prepare for the 2016 session, I welcome your thoughts and suggestions. As always, please don’t hesitate to contact me if you’d like to discuss education, or any other issue, further.

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The State Budget: It’s Time to Start Over

June 26th, 2015

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Connecticut’s new state budget, which the legislature passed narrowly on June 3, has drawn sharp criticism from nearly everyone and praise from very few. The outcry is reverberating everywhere, and genuine outrage is in the air.

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Almost unanimously, Connecticut’s media has been outspoken in its criticism, and scathing coverage by the Wall Street Journal, Forbes, and “Morning Joe” has made the budget fiasco a national story. A major component is the news from many businesses, including GE, that they are considering relocation to other states.

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In the wake of this public criticism, the governor has proposed cutting $220 million from the new business taxes, along with corresponding budget line items. Since the budget has already passed, he wants to include these changes in the “implementer” bills that outline how budget policy will be executed and are on the upcoming special session’s agenda.

Although something is better than nothing, the governor’s proposals do not go far enough in stemming the damage this budget will inflict on the state.

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It’s not too late to start over.

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The vocal opposition isn’t confined to businesses and the media. Still reeling from the 2011 record tax increase, residents descended on Hartford last month to plead against further tax hikes, and they continue to contact legislators in overwhelming numbers. Beyond upset and angry, they’re scared of the impact on their livelihoods, property values, savings, and their ability to afford living here. The budget hits everyone, at all income levels, especially the middle class.

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Among the features that have struck a resounding chord of fiscal horror with so many:

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• A 7% spending increase and $2 billion in tax increases, despite enormous current and future deficits. It’s Connecticut’s second largest tax increase ever, on the heels of the largest. The taxes were sprung on everyone with no public hearings.

• For residents, $442 million in new personal income taxes, as well as other increases. Particularly onerous for the middle class are a property tax credit reduction; repeal of the clothing/footwear under $50 exemption; and a delayed exemption increase for single filers – together with the devastating impact on jobs if companies leave the state.

• For businesses, $760 million in tax increases: a permanent 20% corporate surcharge; new unitary reporting rules; restricting loss carryforwards; new data processing and internet taxes; and tax credit reductions.

• Significant impact on healthcare: $212 million in hospital tax increases; a 6% tax on ambulatory surgical centers; and a $55 million reduction in Medicaid reimbursements. Patient costs will rise and fewer doctors will accept Medicaid. Job losses have already begun.

• Although employee compensation and benefits account for about 35% of state spending, the budget doesn’t touch union contractual agreements. This doesn’t sit well with taxpayers who must pay for $350 million in state employee raises and $228 million for overtime expenses, as well as 12% raises for certain appointees.

• Though the budget earmarks a percentage of sales taxes for transportation, it diverts other transportation funds for different purposes and actually cuts transportation funding by $32 million in 2016.

• Much heralded car tax reform: other sales tax receipts are dedicated to towns that must reduce their vehicle mill rates going forward. But they won’t be reimbursed completely for four years, and revenue shortfalls could stop this from ever happening, leading to higher property taxes.

• With no structural changes that would set the state on a sustainable financial path for the future, the budget produces a $1.6 billion deficit in the next biennium.

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The governor can still veto the budget. He has until mid-July to decide. The vote was far from unanimous: Republicans were joined by 13 Democrats in voting no, and numerous Democrats who voted yes did so reluctantly and under pressure. The public outcry has heightened this unease, and many of the budget’s supporters are now uncomfortable with it.

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The moment is ripe. Connecticut needs a budget that creates a predictable and friendly business environment, preserves vital programs for the neediest, reduces the tax pressure on residents, and makes the structural reforms that will return Connecticut to a firm financial footing and begin repairing its reputation as an attractive place to live and do business.

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In April, House and Senate Republicans shared with our Democratic colleagues and the public a proposal that we believe is a good start. While they preferred to craft their own budget without us and the input of the 42% of the population we represent, we stand ready to bring our ideas back to the table and to work together on a new budget, to save our state.

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Politics must not stand in the way of good government. It’s never too late to do the right thing.

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Voting Against a Budget that Is Bad for Connecticut

June 3rd, 2015

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At the tail end of a session that began yesterday at 11:00 am and continued through the night, the House of Representatives voted at 5:30 this morning on the budget proposed by the governor and majority Democrats. The budget documents had become available for reading only hours before.

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Many of you wrote to me to urge me to oppose the budget. I voted “No” with great conviction, but unfortunately, it passed in the House by a narrow 73-70 margin and now awaits a vote in the Senate. I would like to share with you the remarks I delivered on the House floor.

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Mr. Speaker, the fiscal horror of this budget has clearly struck a chord.

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That chord has resonated loudly with businesses. For the first time, we’ve entered the budget debate against the backdrop of public admonitions by three iconic companies – GE, Aetna, and Travelers — that this isn’t doable anymore. They were joined yesterday by Boehringer Ingelheim.

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The chord has resonated with people, too. Not just my constituents, but constituents from all over the state. They have come to the Capitol to testify, flooded our emailboxes, and continue to light up the phones in this building.

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They’re still reeling from the record tax increases of 2011. They’re not only worried and angry. They’re scared. For their livelihoods, their families, and themselves.

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Why? Because this budget finds a way to hit everyone and everything – except our state’s growing public sector unions, where nearly 40% of the state’s spending remains off-limits.

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This budget jars businesses — big and small and everything in between — with unpredictability ,by changing the rules with taxes meant to sunset, unitary reporting, and new sales taxes. And it hits our hospitals too.

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This budget dips farther into the pockets of the young, the old, the rich, the poor, to take money they can’t save, money they can’t use to build a future or to reap the benefits of the years of work they did to earn it. It clamps down on towns by dictating their tax rates and holding a big stick over their local spending decisions, and redistributes wealth through the regional revenue sharing scheme in the former SB 1, which revived the specter of county government early in this session.

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This budget plays a hat trick with two separate funding sources that leaves transportation funding almost stagnant.

This budget increases spending by 7%, and raises taxes by almost $2 billion, at a time when our state is facing a looming deficit of about $3 billion over the coming biennium and — because it can’t even collect all the taxes it already imposes — a nearly $200 million deficit in the current year.

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As the administration’s budget director said a few months ago, we are in a time of permanent fiscal crisis. With its semantic sleight of hand that pulls $2 billion in spending out from under the spending cap and calls it by another name, this budget violates the fundamental protection our spending cap provides to taxpayers, and pushes them way beyond their means. And when government abuses its taxpayers, it destroys its own ability to meet its obligations to serve them.

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We need a different kind of budget. A budget that spends strategically and prudently, and spends less. A budget that recognizes that in times of financial distress, we can’t have everything we want, that we must use our resources as efficiently as possible to serve as many as well as we can, and that we must make what we already have work really well before we can have anything new.

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Unfortunately, with this budget, Connecticut’s taxpayers will keep paying more and more, and still their services and infrastructure won’t improve. It will cause irreparable damage to our employers and our economy, and accelerate the continuing exodus of jobs and people from our state. Mr. Speaker, I cannot support it.

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Transportation: Legislative Update

April 28th, 2015

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Transportation Infrastructure – Tolls – Transit Corridor Development Authority

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Although this year’s legislative session has been unusually slow, there have recently been several developments in the transportation area that I would like to share with you.

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Long-term Transportation Plan

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On Monday, April 27, the Finance, Revenue, and Bonding Committee held a public hearing on HB 6840, which authorizes about $2.8 billion in bonding over the next five years for a list of 31 transportation projects statewide. Most of these projects involve designing, engineering, and planning in a program meant to provide the “ramp-up” for the governor’s 30-year plan to improve the state’s transportation infrastructure.

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Items relevant to Fairfield County on the bill’s list include improvements to the New Haven main line, Merritt 7 station upgrades, widening of I-95, bicycle/pedestrian improvements, implementing a bus rapid transit corridor between Stamford and Norwalk, and reconfiguration of the Route 7 / Route 15 interchange.

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I presented testimony on Monday to alert Committee members to the absence from the five-year plan of the electrification of the Danbury Branch Line and to convey the urgent need to upgrade the line in the near term.

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To read HB 6840, click here.

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To read my testimony on the bill, click here.

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Tolls and Transportation Funding

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The most pressing question about the governor’s 30-year, $100 billion transportation plan is how to pay for it. Governor Malloy has appointed a nine-member commission to study the funding question and to submit a report by the end of the summer.

Tolls are among the funding options being considered, even though their revenue potential is not high. As Office of Policy and Management Secretary Ben Barnes said in Transportation Committee testimony earlier this year, “I suspect that the toll options that will be most attractive will not produce as much revenue as we think we need.”

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HB 6818, the bill regarding tolls that passed out of the Transportation Committee along party lines on March 18, does not require or allow the reintroduction of tolls. Instead, it requires the DOT Commissioner to deliver to the General Assembly by January 1, 2016 “a program for the establishment and commencement of tolls” which must, among other things, protect any revenues to be generated from diversion to any non-transportation purposes.

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While the bill itself does not allow or require tolls, it’s still a significant step toward a potential reintroduction, because if it becomes law, it could be construed as a signal that the General Assembly favors tolls. This may, in fact, be the reason it was introduced, since the governor could, without a bill, simply instruct the DOT Commissioner to develop a program.

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I voted against, and will continue to vote against, tolls for many reasons, but principally because I believe that instead of imposing more taxes and fees on taxpayers, we should be focusing on spending more responsibly the revenues we already have.

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In February, I joined my House and Senate Republican colleagues in presenting a proposal that would provide a predictable and sustainable transportation funding stream of at least $1 billion each year without either tolls or new taxes or exceeding currently planned levels of bonding. The plan would accomplish this by reallocating to transportation annually $400-700 million of the state’s general obligation bonds that are scheduled to be authorized for non-essential projects.

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To read the tolls bill, HB 6818, click here.

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To read the Republican transportation funding proposal, click here.

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Transportation Corridor Development Authority

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HB 6851, the governor’s bill that would create a quasi-public agency (TCDA) run by a board of political appointees with independent bonding authority to focus on promoting transit-oriented development (TOD) statewide, passed along party lines out of the Transportation Committee yesterday.

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When it was originally introduced, I called the proposal “Eminent Domain on Steroids”, because it gave the TCDA unlimited powers of eminent domain and allowed it to develop projects in municipalities without obtaining any local government approvals. In response to widespread outcry from citizens, local governments, regional Councils of Governments, and legislators, the administration has substantially modified the bill.

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While I am a longstanding supporter of TOD, I voted against the bill and will continue to oppose it, as will many of the municipal CEOs and legislative bodies in our area. It creates a new government entity that towns and cities pursuing TOD do not need. And because the entity must raise money to pay for any bonds it issues, it may be more focused on revenue-generating activities than on municipalities’ best interests.

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To read the TCDA bill, HB 6851, click here.

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Please don’t hesitate to contact me if you’d like to discuss transportation or any other issue further.

I am always happy to hear from you.

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Lavielle: Specter of County Government Comes Back to Haunt Connecticut in SB 1

March 24th, 2015

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HARTFORD – State Rep. Gail Lavielle (R-143) has submitted testimony opposing provisions in a bill that she said would create a new layer of taxing authority and bureaucracy in Connecticut that would be similar to aspects of county government.

Rep. Lavielle’s testimony refers to certain provisions of SB 1, An Act Concerning Tax Fairness and Economic Development, which is currently under consideration by the General Assembly’s Planning and Development Committee.

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Sections 51-55 of the bill require the establishment of a “regional property tax base revenue sharing system”. Under this system, each municipality would remit a portion of its local property taxes to its regional Council of Governments (COG), which would in turn redistribute those funds among all of its member towns and cities, according to a formula that takes into account factors including each municipality’s population and property value.

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“Although we may never call our COGs ‘county government’, this bill is a move in that direction,” Rep. Lavielle continued. “If SB 1 passes as written, Connecticut’s regional structure could acquire the same administrative and cost burdens, bureaucratic complexity, and loss of local access to and authority over local revenues as county government – no matter what we call it.”

Rep. Lavielle noted that certain municipalities would gain revenues through the process outlined in the bill and that and would lose. Those that lose would likely face important shortfalls in their local budgets. To continue to provide essential services to their residents and local businesses, they would be required to raise local taxes, in many cases quite considerably. The result: residents would pay more in order to sustain the new layer of regional government, while also paying more just to maintain essential services in their own municipalities.

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Rep. Lavielle recalled that in 2013, when the General Assembly passed legislation reorganizing Connecticut’s regions and imposing the COG structure on all regional planning organizations, there was much discussion about its implications, and many municipal CEOs expressed concerns that the new legislation might lead to regional taxation initiatives.

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“On June 3, 2013,” she said, “I participated with several others on the House floor in a lively debate of HB 6629, the precursor bill to the COG/regional reorganization legislation passed a few days later. The proponents assured us during the debate that COGs would not be responsible for property taxation issues on a regional basis or at any other level. That assurance is not upheld in SB 1.

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“I believe that this regional tax base proposal will create severe financial stress for individuals, businesses, and municipalities that are already struggling under one of the country’s heaviest combined tax burdens,” said Rep. Lavielle, “and I have urged the Committee not to approve it.

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“If this proposal in SB 1 does pass out of the Committee as written, however, I hope that all of the proponents will characterize it accurately and with all possible transparency to ensure that members of the public and their elected officials fully understand it for what it is,” said Rep. Lavielle. “Creating a new level of government that collects and redistributes tax revenues is not a step that should be taken without widespread public support.”

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Connecticut abolished county government in 1960.

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For Rep. Lavielle’s testimony on SB 1, click here.

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Eminent Domain on Steroids? A New Bill Threatens Cities and Towns

March 10th, 2015

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How would you feel if a group of people who lived elsewhere in the state and whom no one had elected were to take over certain planning and zoning functions in your town or city and unilaterally make critical decisions about entire neighborhoods — like who could own property there, and what they could do with it? Although this scenario seems far-fetched, it is clearly outlined in governor’s bill HB 6851, which has just received a public hearing in the General Assembly.

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HB 6851 would strip towns and cities of part of their local planning and zoning decision-making authority by transferring it to a board of state-level appointees. It would also permanently expose all those who own property anywhere within half a mile of a rail or bus station to the threat of eminent domain.

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On the surface, the purpose of HB 6851 is laudable: to promote transit-oriented development. TOD both encourages the use of public transit and makes it easily accessible to people who cannot or choose not to drive. TOD’s potential beneficiaries include, among others, young professionals, seniors, people with disabilities, and people with limited incomes. Those living outside TOD areas benefit too, from reduced vehicle emissions, less traffic, a multi-generational populace, and concentration of development away from greenspaces.

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TOD is a concept that many communities would like to pursue. But under HB 6851 they might not have the chance, because instead, it would be pursued for them by a group of political appointees, without any requirement for local approvals at all.

Here’s the substance of the bill:

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• It creates a quasi-public entity called the Connecticut Transit Corridor Development Authority (TCDA) that would be run by a board of 11 voting members, including seven political appointees and four state agency commissioners.

• It allows the TCDA to promote TOD in TCDA districts, which include all properties within a half-mile radius of a rail or bus station.

• It gives the TCDA board eminent domain powers within TCDA districts.

• It requires the TCDA board to consult with the chief elected official of a municipality where development is taking place, but does not require the board to obtain his or her approval for anything. Nor does it require the TCDA board to consult with or obtain approvals from any local legislative bodies, boards, or commissions.

• It gives the TCDA the authority to issue its own bonds, financed by revenues collected through fees and rents, as well as state taxes.

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In short, the bill would give 11 non-elected people the authority to do whatever they wanted in 500-acre swaths of any city or town in Connecticut with a rail or bus station, and no one in those municipalities would be able to do anything about it.

Many transit stations are in downtown or village areas. Those areas could change dramatically, with no consideration for the views of local residents or property owners. The changes could do a lot of good, like providing needed affordable housing or new transit parking facilities, but they could also do a lot of harm. For example, the TCDA could demolish a beloved local merchant’s shop to replace it with housing or offices, take over a parking lot that generates municipal revenues and pass on the revenues to the state, or expropriate owners of private homes.

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The political composition of the board also raises questions about contractor and developer selection and agreements, whatever the political party or parties making TCDA board appointments.

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Were the legislative intent simply to offer TOD assistance and incentives to municipalities and to give their citizens or elected officials a vote in local decisions, HB 6851 could easily have been drafted differently. But it wasn’t. Instead, the language of the bill explicitly allows a non-elected body to supersede completely the authority of representative local government with no checks and balances whatsoever.

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HB 6851 now awaits consideration by the legislature’s Planning and Development Committee. The administration’s proposal of the bill raises many disturbing questions about its policy stance on the state’s role in local government. The implications are vast for residents of every city and town in Connecticut.

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Not So Fast: Breaking Through the Transportation Impasse

March 4th, 2015

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Given the many issues with our commuter rail service, the congestion of our highways, and the poor condition of our roads and bridges, the General Assembly’s focus on transportation during this legislative session is welcome news to most people. But what is to be accomplished, and where are we in the process?

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There are two components of what is happening with transportation in Hartford. One is establishing an infrastructure plan, an area where Governor Malloy has taken ownership. The other is determining how to pay for it, a task he has left to the legislature.

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The Infrastructure Plan

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Last month, the administration released its transportation plan, called “Let’s Go CT”, in two booklets that resemble marketing brochures. One, Connecticut’s 5-Year Transportation Ramp-Up Plan, provides a list of  “immediate short-term investments,” with costs for each, and a total budget of $2.8 billion for the five years, to be spent on top of the baseline DOT budget. The other booklet, Connecticut’s Bold Vision for a Transportation Future, provides “the long-term 30-year vision for Connecticut transportation.” The budget estimate for the 30-year plan is $100 billion.

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The booklets include cost estimates, but do not speak to funding sources.

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Funding Options

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Several types of mechanisms for funding transportation infrastructure in general are being discussed in the legislature, but they are not attached to particular projects.

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• Transportation Lockbox. While a law passed last year is meant to protect transportation funds from being diverted for other purposes, it’s generally accepted that the language needs to be stronger. The administration and most legislators are supporting more rigorous statutory language, as well as a constitutional amendment, to ensure that funds budgeted for transportation are used for nothing else.

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• Long-Term Bonding. House and Senate Republicans have made a detailed proposal for reallocating a portion of the state’s projected general obligation bonding every year to transportation, in order to make available $1 billion annually for transportation infrastructure over a 30-year period. The proposal includes no new taxes, tolls, or borrowing increases.

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• Tolls. The Transportation Committee has held a public hearing on a bill allowing border tolls on highways. Federal restrictions on ordinary tolls and low revenue potential may well kill the bill if public opposition doesn’t do it first. Although there are no other bills suggesting alternatives like tolled express lanes that drivers can choose to take or not, or congestion pricing, which involves higher tolls during rush hours and lower or no tolls at other times, options like these are also on the table and may be considered later in the session, through an amendment or another process. While the same federal restrictions don’t apply to these mechanisms, the revenue potential still appears limited.

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What’s the Bottom Line?

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A plan for the five-year “ramp-up” period, with a sequence and order of priority, exists, and the governor’s proposed budget includes an $800 million bonding provision to fund the first two years of it, along with appropriations to pay for the debt service.

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A bill now under consideration proposes a $2 billion bond authorization for years 3-5 of the plan, but there is no anticipated funding stream to pay the estimated $800 million in debt service.

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The list of initiatives for the last 25 years of the 30-year plan is not organized by priority, and has no time sequence. There is no projected funding source. It is, today, a wish list without much structure or certainty of fulfillment.

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Finding the funds to pay for any or all of the plan is no small thing, because the legislature is wrestling with a budget mess of considerable magnitude: a current-year deficit of $100 million and a $2.8 billion deficit for the next two years. This situation casts something of a pall over ambitious future spending plans, even when they focus on an area as critical as transportation infrastructure.

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The truth is that it’s probably not time yet to be either too excited or too worried about any initiatives in the transportation plan beyond the next two years. Until the state’s finances are in order, it may be difficult to break through Connecticut’s transportation impasse.