To the Editor:
In response to Bill Lalor’s recent piece… This popular cry, that all of Connecticut’s problems are because of Democrats and their tax hikes, simplifies and distorts a more complex situation. To be clear, I am an independent, and this isn’t a ‘defense’ of anyone. But we should at least acknowledge the facts if we are to reach a reasonable solution.
In 1989, Democratic governor Jim O’Neill attempted to close the budget gap by increasing the sales tax to 8% to try to raise (adjusted for inflation) $1.6 billion and avoid instituting an income tax.
Connecticut had no income tax until 1991, when Lowell Weicker, a Republican who ran under the [third-party] ‘A Connecticut Party’, instituted a 6% state income tax, equal to $2.2 billion today.
In 2003, John Rowland, a Republican who ran on the platform of eliminating the state income tax, raised taxes by (adjusted for inflation) $800 million, including an additional income tax on those making over $1 million as well as increased ‘sin taxes.’
In 2009, Republican governor Jodi Rell faced massive blowback from both parties after advocating for a spending plan that would create a $2.7 billion budget gap. She finally settled on raising income tax for the wealthy to 6.5% as well as hikes in corporate, estate and cigarette taxes, increasing taxes by (adjusted for inflation) $1 billion. Rell inherited a budget surplus and left with a $3 billion deficit.
In 2011, Democrat Dannel Malloy hiked taxes by almost (adjusted for inflation) $2 billion, and in 2015 increased taxes by another $900 million. He too pledged ‘no tax hikes’.
This isn’t a Democrat or Republican problem. It’s an economic problem going back years when the state relied solely on sales tax for its revenues, combined with a crippling pension plan that has long been neglected.
Connecticut saved no money for pensions until 1971, and very little until the mid 1980s. That left us massively underfunded with virtually no way to catch up. The single best fiscal thing the state could do would be to convert all pensions to 401k, where the individual takes the market risk, rather than the state. It’s just not feasible for taxpayers to guarantee public employees a retirement income anymore.
To address some other points:
Housing: The national median house price is about $230,000. In Fairfield County it’s about $380,000. In Wilton the median price is around $700,000, and in our surrounding towns it’s even greater. Our local underperformance isn’t state income tax related, or policy related. It’s merely a victim of supply and demand. There are only so many people who can afford $1 million-plus houses. Much of that demand had been generated by the financial industry, which was hit hard in 2009 and has not completely recovered. Both UBS and RBS left Stamford, taking with them a lot of current and future homeowners. GE left, not because of taxes (they paid no taxes), but because they were no longer a white goods company. They are a technology company and need to be where they can source talent.
Compounding the problem is the recent change to Federal tax laws that limits the deductibility of property taxes greater than $10,000, a de facto tax hike on most of the area’s population. It would also be easy to argue that housing was previously so over-inflated that comparing our performance to the ‘average’ community is pointless. We can’t blame anyone but ourselves for paying such stupid prices for housing.
The solution isn’t to write OP EDs (or post on Facebook) blaming the other side, or to suggest that it was one issue (and therefore one solution) that caused this situation. It’s been years of poor strategy that got us here. Everyone screams for the government to stop spending money until their supply gets cut off, then it’s, ‘Don’t take my money!’.
Encourage your representatives to take small steps, to meet in the middle. Ask them to take a little bit from everywhere, let everyone have some skin in the game, and stop yelling, ‘No!’ before they’ve listened.
Offer reasonable solutions instead of pointless criticism. Our (local) leaders need to be just that-leaders.