In legislature, time is running out for adoption of fiscal panel’s suggestions
Tax reform is among its recommendations but is not likely to be enacted
With just three weeks left in the legislative session, proponents of a plan for stabilizing the state’s economy say down-to-the-wire budget deliberations will include further consideration of some of their recommendations.
But it would appear tax reform is unlikely to move forward.
In a meeting Tuesday with The Day’s editorial board, Robert Patricelli, co-chairman of the Commission on Fiscal Stability and Economic Growth, said commission members were in “active discussions” with a number of legislative committees.
“We’ll know (the outcome of those discussions) by the end of the week,” he said. “What we need right now are champions.”
Patricelli, a retired health care executive, and Patricia Widlitz, the commission’s vice chairwoman and a former Democratic state representative, swung through the region Tuesday, presenting the commission’s final report during a breakfast meeting of the Chamber of Commerce of Eastern Connecticut at The Spa at Norwich Inn before traveling to New London.
Created by the legislature a year ago and appointed in December, the 14-member commission delivered a “Plan for Connecticut” in just 11 weeks.
Its “pro-growth, revenue-neutral” overhaul of state taxes would cut the income tax rate in every bracket over three years, saving $2.1 billion a year. That would be combined with an increase in the sales tax from 6.35 to 7.24 percent, the imposition of a 0.8 percent tax on corporate payrolls and the elimination of estate and gift taxes and the Business Enterprise Tax.
The commission also recommends raising the state’s minimum wage to $15 an hour by 2022.
Patricelli, who said Connecticut’s business tax structure is “relatively light” compared to other states, acknowledged that the Connecticut Business and Industry Association “hates the payroll tax.”
Raising the minimum wage “seems like throwing gasoline on a fire,” an audience member in Norwich said. “What kind of a message is that to send business?”
Given the shortness of the legislative session and the scope of the changes the commission is recommending, it may not have been realistic to think lawmakers — all of whom face re-election this year — would willingly tackle tax reform, Patricelli and Widlitz said.
“Everything else is up for discussion,” Patricelli said.
Other commission recommendations include having the legislature assume responsibility for defining state employee fringe benefits by removing them from collective bargaining for new contracts, and reforming the teachers’ retirement system by paying down unfunded liabilities with Connecticut State Lottery revenues. The commission would create a joint budget committee of the legislature with the power to set limits on revenues and expenses, and develop a plan to cut $1 billion in annual operating expenses. It calls for raising the gas tax by 7 cents and installing electronic highway tolls.
Patricelli called tolls “inevitable,” noting that Connecticut is the only state on the Atlantic coast that doesn’t have them. He said they’re a “third rail” politically, meaning few in office want to advocate them.
“It ought to be a third rail to stick your head in the sand,” he said. “Can’t we catch up with the rest of the country?”
State Sen. Cathy Osten, the Sprague Democrat who cochairs the legislature’s Appropriations Committee, said in Norwich that she supports tolls and the need for the state to improve its transportation infrastructure. She acknowledged the consequences of the state’s failure to fully fund its state employee pension obligations for more than seven decades.
“I don’t like everything they’re saying,” Osten said of the commission’s recommendations. “But if you like something (in the commission’s report), call your legislator.”
Patricelli and Widlitz lamented time constraints that they said prevented the commission from properly marketing its plan, including through social media. Responding to a suggestion offered during the meeting in New London, they agreed it would make sense for the next governor to be the champion they’re seeking.