We have a new President, but that does not mean that the work at the General Assembly is slowing down. This week we have a look at the new revenue estimates, possible revenue sources to balance the budget, our analysis of the Children's Budget, and our new report on property tax reform. Let's get started.
The latest: consensus revenue estimates - January
State law directs the Office of Policy and Management (OPM), the Office of Fiscal Analysis (OFA) and the State Comptroller (that is, the budget agencies for the executive and legislature, plus the elected official who keeps track of the figures) to release a consensus revenue estimate a few times during the year. We just got a new one today.
Why is this consensus estimate important? It serves as the basis for the Governor's proposed budget and for the budget that the legislature will approve.
Last week's consensus revenue estimate has some mixed news. For the current budget year (FY17) the state now has a small budget surplus, thanks to stronger-than-expected growth in business tax revenue. Sales and income tax collections, however, are less than expected, keeping the surplus at a modest $10 million. This at least is a welcome contrast with last year, when FY16 collections constantly missed their targets, prompting several rounds of additional budget cuts.
The new revenue estimates have also left the budget projections for FY18 and onward largely unchanged. That is, Connecticut is still facing deficits above $1.4 billion a year; this adjustment only reduced the projected gap for FY18 by $31 million.
In other words: still a dire budget, but at least it is not getting worse.
Spotlight: a look at the state budget
Tomorrow, Connecticut Voices for Children will be hosting our 16th Annual Budget Forum at the Capitol to provide a clear, broad overview about the state's fiscal situation. Here are the highlights of the four policy briefs and reports that we will discuss tomorrow. They will form the basis of our advocacy work this session.
Long term investments in children and families have been the cornerstone of the state's prosperity. To preserve these investments and support long term economic health, a balanced approach to the upcoming biennial budget must include new resources.
In this report, we explore what the current challenges are facing Connecticut's tax system and provide several possible tools to modernize and update it whilealso raising needed revenue. You can download the full report here.
Equal funding for equal effort: property tax reform
Connecticut relies on property taxes to fund local government and public education.This arrangement gives municipalities local control and flexibility, but also makes residents in poor communities pay more, stifles economic development, and exacerbates racial inequalities.
In this report we explore a partial solution to this problem: a system in which communities that tax themselves equally for education receive equal per-pupil funding.Our model would cut taxes for 2.7 million residents in 117 cities and towns, while maintaining local control and education funding levels.
As the General Assembly considers changes to education funding, this will be especially relevant this session. Make sure to read the report here.
The Children's Budget:
In our new report we find that the share of the state budget devoted to children has reached a record low, down to 29.5 percent of overall spending. Although absolute spending in the Children's Budget has risen modestly since 2008 (by $269.1 million or 4.5 percent, in 2017 dollars), the increase in spending in other budget areas has outpaced investments in children.
We will present the full policy brief tomorrow at the budget forum. You can download it here.
Business tax breaks:
Next week we will look at the growing cost of business tax breaks in Connecticut's state budget. We will provide a sneak peek of the report at tomorrow's Budget Forum.
For a primer in business taxes in Connecticut, do not miss this article by Derek Thomas from earlier this year.
Still time to register: State Budget Forum
Tomorrow we will convene at the State Capitol for Connecticut Voices for Children's 16th Annual State Budget Forum: "Building a Budget for Connecticut's Future."
- WHAT: 16th Annual State Budget Forum.
- WHEN: January 24th from 8:30 AM to 12:00 PM.
- WHERE: Old Judiciary Room, State Capitol, 210 Capitol Avenue, Hartford.
- REGISTRATION: please RSVP here.Seating is limited.
Participants will include Governor Malloy, Secretary Benjamin Barnes, Comptroller Kevin Lembo, Mayor Ton Harp (New Haven), and Representative Vincent Candelora, among others. Please visit our event page for more information, or e-mail Ray Noonan with any questions.
This Week: Committee Meetings
Another week of committee meetings, as legislators begin to map out the work ahead this legislative session. Committee members and chairs continue discussing what bills will be raised and will begin to draft committee bills.
This means that this week we will see again quite a few committee meetings: Transportation, Environment and Appropriations today; Housing Tuesday; Public Health and Planning Wednesday; Aging, Public Safety, Higher Education, Human Services, and Veteran's Affairs Thursday; and Environment again on Friday. The agenda for each meeting is usually posted the day before on the CGA website. This week, committees will be mostly voting on which bills will be drafted as committee bills and/or get public hearings.
The full schedule can be found here We will keep you posted on any major decisions or bills to follow as we go along.
What we are reading
- Grand Lists in most Connecticut towns have shown a decrease since 2008, at TrendCT. An interesting quote: "Towns that emphasized creating multi-family housing saw an increase in town property values since 2008, like Bloomfield (10.5 percent), Brooklyn (6.5 percent), and Mansfield (8.5 percent)."
- Peak Millennial? Cities Can't Assume a Continued Boost From the Young at the New York Times. "There are already some signs that the inflow of young professionals into cities has reached its peak, and that the outflow of mid-30s couples to the suburbs has resumed after stalling during the Great Recession."
- Final 2016 labor report offers mixed bag, at CT News Junkie. How mixed? "In December, the state lost 1,700 jobs. At the same time Connecticut's unemployment rate for December continued to fall from 4.7 to 4.4 percent"
Medicaid Block Grant Would Slash Federal Funding, Shift Costs to States, and Leave Millions More Uninsured, at the Center for Budget and Policy Priorities. The Trump administration has signaled its intention to block grant Medicaid.
- Issue Area:
- Budget and Tax