February 2014

Where Should We Look to Fund Public Investment? Mapping Connecticut's Revenue Landscape

Wade Gibson, J.D.

As Connecticut faces projected budget deficits and a shrinking portion of the state budget targeted to children and families, this report comparing Connecticut’s state revenue system to those of other states concludes that the state has additional capacity to support public investments in young people.  The analysis by the Fiscal Policy Center at Connecticut Voices finds that residents of many wealthy towns enjoy property tax rates that are a fraction of those in neighboring cities and that Connecticut has the lowest charges and fees of any state.

Among the findings of the report:

  • Connecticut state spending is comparatively low and has remained so for years. In Fiscal Year 2011, Connecticut state and local government spending as a share of personal income ranked 46th (5th lowest) among 50 states, similar to its ranking of 48th in 2000.  Connecticut remained near the bottom of all 50 states in state and local spending as a share of personal income on education (45th in 2011), transportation (48th), public safety (47th), public salaries and wages (45th), housing and environment (49th), public welfare (42nd), and social services (42nd).
  • Connecticut raises less revenue than any other state in charges and fees, such as tolls, medical charges at public hospitals, and public college tuition. Connecticut raises less from these fees as a share of personal income primarily because it enrolls comparatively few students in public colleges and has fewer public hospitals, so it earns less in tuition and medical charges than other states. As a result, Connecticut’s overall state and local revenues (combined charges, fees and taxes) are comparatively low (43rd), though its taxes alone rank fairly high (13th).
  • While Connecticut’s local property taxes are high, other state taxes are low and increasingly progressive. Connecticut overall state and local taxes rank relatively high, but factoring out the property tax, Connecticut’s ranking falls from 13th to 29th highest. Moreover, the mix of taxes in Connecticut has changed in favor of progressive income taxes rather than regressive sales taxes, which fall harder on low- and middle-income families.
  • While property taxes are comparatively high overall, they are low in many wealthy towns. Towns like Darien and Greenwich have effective property tax rates that are a fraction of those in neighboring Connecticut cities and New York suburbs.

 

Issue Area:
Budget and Tax