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Voices Speaking

January 25, 2018

A Balanced Approach to Fiscal Stability and Economic Growth

Roger Senserrich

On Wednesday, January 24th, Ellen Shemitz, Executive Director at Connecticut Voices for Children, testified in front of the Commission on Fiscal Stability and Economic Growth, urging support for strategic investments that will spur growth in the state economy, create a prepared workforce, and fuel a competitive business environment.

Shemitz urged the Commission to reject an austerity approach to the state budget deficit, explaining that further cuts to critical services and delays to infrastructure repairs would undermine fiscal stability and impede the state’s ability to compete with its neighbors. She stated: “Only by investing in more inclusive and shared prosperity can we ensure stronger and more sustainable economic growth.”

Over the last few weeks, the Commission has discussed the possible causes of Connecticut's fiscal crisis, looking for a way forward. In her presentation, Shemitz laid out the three main causes of the persistent budget deficits: slow economic growth, an outdated tax system, and growing fixed costs. To solve the crisis, she called for an Opportunity Agenda that would prioritize inclusive economic growth, child and family well-being, and equity and excellence in education.

Connecticut´s economic recovery after the Great Recession has been unusually slow, with job growth trailing behind most of the nation and economic output only recently returning to pre-2008 levels. 

Slow economic growth is only part of the problem. Connecticut´s tax system is in many ways outdated, failing to keep up with the pace of changes in the economy. Shemitz highlighted the need for changes across sales, business, and property taxes to assure adequate state revenue and to improve tax equity.

Finally, the growth of fixed costs has crowded out other spending, with non-functional costs (pension contributions for state workers and teachers, health care and pensions for retirees, and debt service) now constituting a larger share of the budget than services for children and families (including education, healthcare, and early childhood).

While the steep rise in fixed costs results from decades of financial mismanagement, the full impact is only now being felt. Connecticut Voices for Children in concert with students from the Yale Law School Legislative Clinic have created financial models to show that existing sources of revenue simply cannot meet the entirety of the state’s obligations. Or as Shemitz pointed out, “Connecticut cannot cut its way out of this crisis. The only path forward is to grow the economy: to grow our way to fiscal health.”  

Shemitz called upon the Commission to recommend changes to recently enacted fiscal constraints that she warned would prevent strategic investments in state infrastructure, public education, and core city revitalization. She urged the Commission to recommend repeal of new legislation concerning bond covenants: a so-called bond lock that takes budgetary and legislative power away from the state’s elected representatives and gives it to Wall Street. “We need to use all of the available tools possible to prioritize inclusive economic growth and open the doors of opportunity," said Shemitz.

You can watch the full presentation below. The slides are available here

Issue Area:
Budget and Tax
Tags:
bond lock, budget, deficit, fiscal
April 4, 2018

What is the Bond Lock?

On March 14th Connecticut Voices for Children held our ¨Breaking the Bond Lock" roundtable, where we explained in great detail the potential impact that this fiscal restriction will have on children and families. You can watch the presentation below. 

 

For a full analysis on the Bond Lock, a FAQ, and supporting materials, check our publications here

Issue Area:
Budget and Tax
Tags:
bond lock, budget, fiscal, tax
April 11, 2018

Bond Lock News Update

Rachel Silbermann, Ph.D.

Connecticut Voices for Children would like to express our deep appreciation of the Finance, Revenue, and Bonding Committee, which approved a bill on Thursday that would partially delay implementation of the “Bond Lock.” The bill would also initiate a study of how the Bond Lock might affect Connecticut’s economy.  

The Bond Lock stipulates that whenever Connecticut issues a bond for a two-year period beginning in May, it must vow not to alter three new spending restrictions included in the bipartisan budget passed in October. Notably, none of these restrictions had public hearings to fine-tune the language and mechanisms. This covenant limits the state’s ability to address both existing and unanticipated challenges and threatens state investments necessary to build thriving communities. Because bonds are considered contracts, Connecticut will be legally bound to maintain these spending and revenue restraints despite what future Governors or legislatures find to be in the best interests of the state.

We applaud the bill for delaying the implementation of the covenant for two of the three caps, - the spending cap and the bond cap - and requiring a study of their potential impact. Further action will be needed to amend the bill and build legislative support for passage. We will send additional information once it becomes available.

Delay or repeal of the bond lock remains Voices’ top priority this session.

Issue Area:
Budget and Tax
Tags:
bond lock, budget, delay, fiscal, spending cap
April 16, 2018

Happy Tax Day!

Rachel Silbermann, Ph.D.

Happy Tax Day!

Connecticut Voices for Children believes that tax day offers a chance for us to reflect on the “why” and “what” of taxes. Simply put, democratic societies cannot function without fair, transparent, and adequate tax systems. By paying taxes, we contribute to our community, state, and nation, and it’s thanks to our taxes that our government can work for us. Tax day offers us the chance to celebrate some of the ways our taxes contribute to the high quality of life in Connecticut:

Even as we celebrate what our taxes support, we can also pause this tax day to reflect upon how we can improve the tax system and address the significant disparities in our state. Our tax system works best when everyone pays their fair share. The new federal tax law gives massive breaks to special interests, with the wealthy receiving the lion’s share of the tax cut in almost every state. In Connecticut, the majority of the tax cut will go to those with incomes above $250,000. Cuts like this have consequences, with the new federal changes creating a projected deficit of more than one trillion dollars, giving rise to calls for cuts to some of the very programs and services we value most: like health care and clean air and water.

On this tax day, take pride in doing your part. Remember that we can act at the state level to create stronger, fairer economies and cleaner tax codes, with the goal of having more dollars to spend on the public services that ensure meaningful opportunity for all of our residents. #ProudToPay #TaxDay

 
Issue Area:
Budget and Tax
Tags:
budget, Connecticut, fiscal, Good News, Tax day