CT lawmakers look into budget inequities

With gas prices soaring, stocks faltering, inflation at a 40-year high and a recession looming, Connecticut lawmakers are forcing the state to look more closely at inequality.

Whoever wins this fall’s gubernatorial election cannot, by law, propose a new budget without showing how it addresses racial and socio-economic inequities.

The budget bill passed this spring “requires the governor’s budget document to include an explanation of how its provisions further the governor’s efforts to ensure equity in the state.”

After waiting seven years to assess tax fairness in Connecticut, lawmakers are also insisting they explore it again by the end of next year — with a new focus on the advantages of the uberwealthy.

And while a mandated study on housing segregation missed its first deadline, one legislative leader expects more data on this topic will await lawmakers when the regular 2023 session convenes in January.

“I think there are a lot of people committed to the issue of equity,” said House Majority Leader Jason Rojas. “In order to achieve that, we have to be really intentional, but we also have to be really honest with ourselves.”

In Connecticut — one of the wealthiest states in America but also home to some of its poorest cities — it’s been too easy at times for government to look the other way, said Rojas, an East Hartford Democrat.

But after two years of the coronavirus pandemic and with economists now fearful a national recession is looming large, policymakers can’t afford any lack of focus, he added.

Lawmakers challenge governor to use budget to ensure equity

The focus begins, Rojas said, with the state budget. In the new fiscal year that begins July, that’s a $24.2 billion blueprint that spells out how Connecticut will fund education, health care, public safety, economic development and many other core programs.

The budget debate traditionally starts in early February when the governor proposes a spending and revenue plan.

Going forward, the legislature mandated, that proposal must “identify and remedy past and present patterns of discrimination.”

It also must ensure these patterns, whether intentional or not, aren’t being reinforced or perpetuated.

“Assuring equity is a key consideration when making recommendations to the legislature about how to allocate resources,” Gov. Ned Lamont’s budget spokesman, Chris Collibee, said. “This provision will keep future administrations accountable for this important set of considerations.”

That sounds nice in concept, said Puya Gerami, campaign manager of Recovery for All CT, a coalition of labor, faith and other community organizations. But reform advocates are determined this won’t be another state analysis left to gather dust on a shelf.

“We’re going to be using [it] as a tool to go on offense and push our lawmakers to adopt the transformational policies we know they should have adopted yesterday,” Gerami said. “We’re still experiencing this crisis of massive, unmet need.”

That’s easier said than done, though.

State finances in the short term are very robust, even though Connecticut has more than $90 billion in long-term unfunded obligations covering bonded debt and unfunded retirement benefit programs.

The state is expected to enter the new fiscal year with $3.3 billion in its rainy day fund and modestly rosy revenue projections for the next two fiscal years.

But state revenues, historically, are volatile and tend to plunge quickly during a recession.

Adding funding to expand health care access and educational opportunities could become more challenging in a downturn.

While Lamont and the legislature approved more than $660 million in tax relief this year, more than half of it is one-time. Gerami and other progressives also are seeking more ongoing relief for the poor and middle class. In a recession, it might be hard to pay for this relief without boosting tax burdens elsewhere.

Many moderate Democrats, including Lamont, and most Republicans, including GOP gubernatorial candidate Bob Stefanowski, oppose increasing state income taxes on wealthy households.

Keeping a closer watch on tax fairness

Rep. Sean Scanlon, DGuilford, wanted Connecticut to begin shifting taxes this year with an ongoing $600-per-child state income tax credit for low- and middle-income families.

Lamont and legislators instead agreed to a onetime rebate of $250 per child this summer — a move Republicans have called a political stunt in a state election year. The governor has said he would like to make the credit ongoing in 2023 but first wants to reassess state finances at that time.

But nearly 136,500 households have applied for the tax rebate so far on behalf of 216,109 children.

“The fact that 40% of the eligible families have signed up in the first 28 days of this being available speaks to the need that’s out there,” said Scanlon, who is running for state comptroller.

To keep tax fairness on legislators’ minds, Scanlon spearheaded another new provision in the state budget that mandates a new analysis of tax burdens in Connecticut by December 2023.

That’s significant, given that when legislators received their last one back in February, it had been more than seven years since the state had studied the issue.

It found that people who earned less than $44,758 in 2019 effectively lost nearly 26% of their earnings to state and municipal taxes, nearly four times the rate paid by Connecticut’s wealthiest families. Those making between $44,758 and $74,688 paid nearly three times that of those at the top.

The next report also must analyze specifically how much the top-earning 5% and 1% of all households actually pay.

“I think there’s a growing understanding at both the state and the national level that our tax code is fundamentally flawed,” Scanlon said.

Will more information lead to actual reforms?

But the head of the legislature’s Black and Puerto Rican Caucus was skeptical that more reports and analyses will lead to actual reforms.

“I don’t need too many more studies showing me how the rich got richer and the poor got poorer,” said Rep. Gerardo Reyes, DWaterbury.

Until suburban and rural legislators are willing to risk voting on issues that may prove unpopular in their home districts, he said, “the great divide is only going to get worse.”

Those surprised at his skepticism, he added, need only look at the occasional affordable housing debates, either at the Capitol or in communities across the state.

Any suggestion that the state should do more to force affluent suburbs to permit more affordable housing developments is “aggressively and ferociously fought,” Reyes said. “The appetite [at the Capitol] for that kind of conversation is not real. The narrative in that conversation is basically lip service.”

Emily Byrne, executive director of Connecticut Voices for Children, agrees that reforms won’t happen without politically risky decisions.

But Byrne also said one way to build momentum for change is to discuss racial and social inequities openly and more often.

Given the number of households statewide — not just in cities — harmed by the pandemic, inflation and issues of wealth inequality, politicians who don’t act do so at their own risk, she said.

“I certainly think that kitchen tables across the state are talking about taxes and the fairness of taxes more than ever,” she said. “For elected officials in this day and age not to be responsive to the growing movement of people who are rightfully concerned about inequality and inequity in this state — it would not be advisable.”

Rojas added that even though affordable housing remains one of the most sensitive issues in state politics, he remains hopeful that the legislature, armed with more information, can continue to make changes.

Lawmakers in 2021 ordered the Lamont administration to study whether state policy plays a role in perpetuating racial segregation when it comes to affordable housing.

A final study, due last January, still hasn’t been completed, but Rojas said legislative leaders realized that was “a very aggressive timeline” and opted not to press the issue.

But he quickly added that he and other leaders haven’t forgotten and are hopeful for a report in 2023.

Whether it involves housing, health care, economic opportunity or any core issues, inequalities along racial and social lines “should be in all of our minds,” he added. “I assume everybody cares about this.”