Blog: Taxes & Government Spending

Taxes & Government Spending, Healthcare, Regulation

CT Government Weekly Rundown -- October 21

  • Oct 21, 2013
  • by Alexandra Forrester
CT Government Weekly Rundown -- October 21

New Executive Order Aims at More Efficient Regulation
On October 16th Gov. Malloy issued an Executive Order aimed at increasing regulatory transparency and efficiency. The order allows public comment on, and analysis of, state regulations four years or older. The agencies responsible for these regulations must then review these comments, conduct their own independent analysis, and submit a report on the results to the Governor’s office by February 14th of next year.

The order’s stated aim is to ease the “substantial burdens” that businesses face from state regulations.  In a Connecticut Business & Industry Association Survey 7 in 10 CT businesses said they believe that the state’s regulatory environment is more restrictive than other states.

The executive order is certainly a positive step, though where the rubber hits the road is in actually getting rid of counterproductive regulations.  For instance, the CPI’s recent report identifying some specific regulations where the costs exceed the benefits included environmental regulations that the Department of Energy and Environmental Protection itself has recommended repealing for several years.  But the legislature has yet to act on that recommendation.
It is also curious that the Governor is exempting from scrutiny any regulations passed under his watch.

What it means for you:  Anyone may comment on regulations passed more than four years ago until December 16th of this year.   You can email governor.regulations@ct.gov, or visit http://www.governor.ct.gov/regulations. 

Audit of UConn Health Center Reveals Overspending
An Audit of the UConn Health Center reveled fiscal inattentiveness, overspending, and a variety of other financial management problems with the state-funded health care and health research facility. Examples of mismanagement included overspending on legal fees, with billing rates as high as $820 per hour, and spending $73,000 on a sabbatical for an employee who never returned.

What it means for you: The dollar values at issue in the identified missteps are a small share of the Health Center’s budget.  But any mismanagement of the public fisc should be a matter of public concern.

About the Author: Alex Forrester is a policy analyst for the CPI

Jobs & the Economy, Taxes & Government Spending

Statement on State Takeover of New Haven Open

  • Oct 10, 2013
  • by Ben Zimmer
Statement on State Takeover of New Haven Open

Buying the rights to run the New Haven Open is just the latest example of the Malloy administration's flawed economic development strategy -- handouts to certain companies paid for by higher taxes on everyone else.

Running tennis tournaments is not the job of state government for the same reason managing restaurants is not government's job -- taxpayers should not be subsidizing entertainment services for which there is insufficient demand.  There is a reason private sector sponsors were not willing to pay enough to keep the tournament here without a government subsidy -- attendance has dropped from more than 80,000 in 2008 to below 50,000 in 2013.   Economic development in Connecticut's urban areas requires a long-term strategy focused on education & workforce development, prudent infrastructure investment, crime prevention, and a less hostile attitude towards business.  Propping up economically unviable tennis tournaments is not the answer.

The Malloy administration defended the decision by citing a 2008 study that the tournament generated $26 million in “economic development” for the New Haven region.  This is like citing Lehman Brothers’ profitability in 2006 as a reason to buy shares in 2008.  The 2008 New Haven Open (then called the “Pilot Pen Open”) was a completely different animal from today’s tournament.  Overall attendance was nearly twice the current level, and the tournament drew the world’s top-ranked players, leading to substantial out-of-state attendance and interest that no longer exists.  If the tournament still resulted in nearly that much economic activity today, it could turn a profit and wouldn’t need state bailout money.

About the Author: Ben Zimmer is the CPI's executive director

Jobs & the Economy, Taxes & Government Spending, Environment

CT Government Round Up Weekly Rundown—September 30

  • Sep 30, 2013
  • by Alexandra Forrester
CT Government Round Up Weekly Rundown—September 30

Debt Debates Heat Up as State Approaches Unofficial Bonding Ceiling

The state is creeping closer to its self-imposed unofficial $1.8 billion bonding ceiling, reaching $1.78 billion as the CT Bond Commission plans to borrow another $395.5 million in GO Bonds by the end of the week.  With two more Bond Commission meetings scheduled for this year, it seems likely the government will exceed the ceiling.

This announcement added fuel to the debate concerning Connecticut’s government debt, which is among the highest in the country on a per capita and per GDP basis.  Recently, this debate has concerned whether high debt is good or bad for job creation. As the Malloy administration and a recent UConn report have noted, debt-financed spending does create jobs in the short-term.  The problem is borrowed money has to be paid back, requiring higher taxes or reduced future spending, which serve as drags on job growth.  So the state should take care that bonds are used to fund projects that are good investments, paying back initial investments by generating comparable returns.

Two recent debt-financed payments to companies illustrate the difference between sound and imprudent bonding. Connecticut this week gave $2.5 million to Kayak Software in exchange for a commitment to create 50 jobs, and gave of $4 million to BYK -- a German chemical company -- in exchange for a commitment to create 37 jobs.  The CPI’s work on state jobs incentives notes that to achieve a ten-year return from incremental tax revenues (income, sales, and otherwise), an incentive’s cost per job should not exceed half of the jobs’ average annual salary.  At a cost of $50,000 per job the Kayak deal could meet this threshold.  At a cost of $110,000 per job, it’s doubtful the BYK deal does.

What it means for you: Connecticut’s high debt is a problem for long-term economic growth.  The solution is not to abandon all bonding, but to apply more rigorous analysis and exercise greater discretion in selecting projects.
 
Commission Orders Newtown 911 Calls Released

On Wednesday the CT Freedom of Information Commission ordered Newtown Police and CT State Prosecutors to release the 911 emergency calls from the Sandy Hook Elementary School shootings. The State’s Attorney Office plans to appeal to Superior Court.  The records will remain private until legal proceedings have concluded.

These proceedings are separate from a FOI taskforce created last June. This task force is expected to make a report January 1st, recommending more general strategies for balancing victim privacy under the Freedom of Information Act with the public’s right to information.

What it means for you: In these recent proceedings the focus in arguments has been over legal technicalities, like whether Newtown investigation is “ongoing.” But the real underlying concern is how to protect victim privacy while respecting the public’s right’s to information.

CT Legislature Blocks Wind Power Regulations for Third Time

The General Assembly Regulations Review Committee rejected regulatory changes that would end the state’s moratorium on in-state wind power generation. 

This is the third time in nine months the committee has rejected the changes, which effectively takes CT wind power out of the running for federal tax credits available to wind turbine projects.  The credits are only available to projects that begin construction by the end of this year. The Legislative Commissioner’s Office’s had recommended approving the legislation.

The Regulations Review Committee’s lukewarm response to CT wind power comes in the wake of the Malloy Administration’s recent establishment of a 15-year contract with a wind farm in Maine.

What it means for you: At least for now, Connecticut will not be seeing any in-state wind power generation.

About the Author: Alexandra Forrester is a CPI Policy Analyst

Jobs & the Economy, Taxes & Government Spending, Education, Crime & Public Safety

CT Government Weekly Rundown -- September 23

  • Sep 23, 2013
  • by Alexandra Forrester
CT Government Weekly Rundown -- September 23

August 2013 Jobs Data Shows CT Continuing to Lag USA in Job Growth
The Department of Labor this week released the August results of its monthly employment surveys of Connecticut employers and residents.  The employer survey showed the state’s “nonfarm payrolls” decreasing by 6,000.  However, this comes on the heals of an abnormally large gain of 11,500 that the survey reported for July.   Both the large gain in July and large loss in August reflect month-to-month volatility – the overall trend in the employment survey remains one of slow but steady growth.  The Department’s monthly survey of Connecticut households showed the number of Connecticut “residents employed” decreasing by 1,400, continuing a trend over the last few years.

The most useful way to understand jobs numbers is to not read too heavily into any one report, but rather to look at longer term year-over-year trends.  It is also useful to compare Connecticut’s job performance to the rest of the country, as that helps isolate state-specific job trends. 

From August 2012 to August 2013 Connecticut’s “nonfarm payrolls” grew by 15,400, or 0.94%.  During the same period, US nonfarm payrolls grew by 1.65%, nearly twice Connecticut’s rate.  From August 2012 to August 2013, the number of Connecticut “residents employed”  fell by 14,700, a 0.86% reduction.  During the same period, the number of US residents employed grew by 1.41%. 

What It Means For You: The Department of Labor’s two employment surveys paint slightly different pictures of the state’s job performance.  But even if you go exclusively by the employer survey – which paints the more favorable picture of the two – the state’s jobs performance remains worse than that of the US as a whole.


State Sued for Allegedly Skimping on Education FundingOn September 16, the Connecticut Supreme Court heard the state’s case to dismiss a nine-year-old suit accusing the government of shirking its state constitutional obligation to provide adequate education for all residents. The Connecticut Coalition for Justice in Education Funding began the suit in 2005—now the state is looking to dismiss the case in light of the recent education reforms. The CT attorney general argues that the 2012 education reforms and the 2013 changes to the Education Cost Sharing (ECS) formula satisfies the state’s constitutional requirements. Supporters of the suit disagree, stating that current funding for schools falls 763 million short of the ECS Formula.

A CPI paper on education reform released last week notes that the ECS program has been successful in eliminating overall inequality between poorer and wealthier districts  – the wealthiest twenty percent of districts in Connecticut now spend roughly the same per student as the poorest twenty percent of districts.  But in spite of the 2012 reforms and 2013 changes, the ECS program remains riddled with its own inequities and fails to incentivize the effective use of allocated funds.  The CPI paper argues Connecticut should replace ECS with a “money follows the child” student-based allocation model, weighted to the students’ needs.  In this model students “carry” their allotted per-pupil funding with them to whichever school they attend. The allotted amount per student should be based on a weighted student formula, which allocates more money for students whose education is more costly, such as those in extreme poverty, English Language Learners, and special education students. Several states and districts, including Rhode Island, San Francisco, and New York City have implemented per-pupil cost formulas that could be a model for Connecticut.

What it means for you: Spending more on education is never a bad thing, but the state also needs to change the structure of its education funding to make spending more effective.

State Announces Tax Amnesty Until November 15th
The state Department of Revenue Services announced on September 16th that it is offering a new tax amnesty program for the next 60 days. This program will allow businesses and residents to pay back-taxes with a 75 percent reduction in interest owed. The program is expected to bring in 35 million in revenue.

What it means for you: If you are one of the 80,000 taxpayers that owes the state money, now is a good time to pay. To encourage taxpayers to take advantage of this program, the state will increase the interest penalty it applies to delinquent taxes from 10 to 25 percent on any taxes still owed after the amnesty period ends.

State Grants $5 million to Improve School Security
Gov. Malloy announced on September 18th the first round of funding for increasing school security. The initiative, established in the state's recent gun control legislation, will provide $5 million in grants now and $15 million by the end of this calendar year.  The grants are awarded to municipalities, who must offer some amount of matching spending.

What it means for you: If your district is one of the 36 that successfully procured funding, you may see increased security measures within schools.  However, there are limitations on the uses of state funds. For instance, state funds cannot be used to hire armed guards, although municipalities can hire armed guards on their own if they wish.

About the Author: Alex Forrester is a policy analyst for the CPI

Taxes & Government Spending, Education, Legislation

CT Government Weekly Rundown—September 16

  • Sep 16, 2013
  • by Alexandra Forrester
CT Government Weekly Rundown—September 16

House Speaker To Revive Debate on Car Tax, Municipal Tax Reform

Connecticut House Speaker Brendan Sharkey announced Thursday that the upcoming 2014 legislative session will once again address municipal property tax reform.  Last session, municipal leaders shot down Sharkey’s proposal to standardize and phase out local property taxes on cars, arguing municipalities need the tax revenue.  Municipal leaders have indicated they may once again object to a phase-out of the tax.   Sharkey stressed the importance of increasing local government efficiency to make up for the lost revenue, and plans to re-launch the legislature’s Municipal Opportunities and Regional Efficiencies (MORE) Commission to identify savings opportunities.  The Connecticut Council of Municipalities has noted that one driver of Connecticut’s high local property taxes, on cars in otherwise, is the large number of unfunded municipal mandates – i.e. costly things that the state government requires localities to do, without providing them the resources do them.

What it means for you: Connecticut is one of two states in the nation to have a car tax that is not part of a broader tangible personal property tax, and the only one to have the magnitude of the tax vary by locality. Is this a good way for Connecticut to stand out? Tax specialists say no.  But it does seem odd for state government to denounce high local taxes while simultaneously mandating local government spending.   

Audit of Connecticut’s Community Colleges Finds Deficiencies

An auditor’s report for the Connecticut Community colleges released on Wednesday found “significant deficiencies” in the oversight of finances at the colleges.  Issues the report cited included improper controls over school inventory, failing to follow proper notice and bidding procedures for large purchases and contracts, and paying part-time instructors for classes that were cancelled.  The report’s author characterized the missteps as “small on their face, but we're looking at protecting controls that may lead to bigger losses of … resources."  The audit looked at Fiscal Years 2010-2011, when the community college system had its own board of trustees.  That board has since been merged with the board for the state’s regional colleges.  You can read the full audit report here.

What it means for you: The dollar amounts at issue in the identified missteps represent a small portion of colleges’ budgets, but any time taxpayer money is not properly managed it should be a matter of public concern.

About the Author: Alex Forrester is a policy analyst for the CPI