Memo to the Gov: Tax Increases are Not the Answer

By Tom Evers

December 06, 2002

With storms turning out record amounts of fluffy white stuff, it turns out that snow may not be the only unwelcome thing in the forecast for Connecticut residents this winter. 

Governor John Rowland may have made the mistake of his political career last night when he decided that tax increases are in the forecast for Connecticut residents.  In his attempt to resolve a burdensome $500 million dollar budget gap, Rowland decided that, in part, the problem would be laid at the feet of taxpayers in the sum of an astounding $200 million dollars.  Rowland addressed Connecticut residents last evening during dinnertime with his proposed answer; but it turns out that his so-called "fair solution" may be unfair to those very people who supported him during this recent Gubernatorial bid. 

While its true that the Democratically controlled legislature has spent the last month of so-called "budget negotiations" suggesting several new tax schemes, and refusing to discuss the cutting of many, high-cost, government programs, the Governor, it seems didn't have the stomach to stand up to them when it came to an income tax increase.  And its not only a violation of voter trust, it's also a violation of Republican principle.  This is the first time that Rowland has raised the income tax and sadly, he has blemished his otherwise perfect record -- during his final term as Governor.

Rowland told his television audience that he plans on raising taxes by $200 million dollars to attempt to close the $500 million dollar gap (although we were told that "the tax increases will include an increase in income taxes paid by those earning more than $1 million dollars a year." - its yet to be determined just how this tax increase will effect each of us in the non-millionaire category.)  The Governor managed to get at least part of it right; he demanded the cutting of $200 million dollars in spending on what at least this author believes to be a surface amount of frivolous programs and ridiculous projects such as Adrian's Landing.   It's hard to imagine that more than $200 million in pork programs couldn't be slashed from the state budget.  I guess $200 million seemed like a nice, round figure. 

Rowland also gets small points for pointing out that Connecticut's state employee union thugs weren't in the mood for negotiating salary cuts or even coming to the table for discussions.  He also was correct in saying that state union representatives refused to meet with state employees to discuss the matter in an open forum.  Rather than work with the Governor to save jobs, they opted like their Democratic allies in the State Legislature, to cross their arms and take the bull nosed approach.  As a result of this brilliant strategy, 2,800 state government workers will lose their jobs.  Rowland's mistake is not cutting additional jobs to make up for the gap.   But again, perhaps 2,800 seemed like a nice, round figure.

Another concern for Republicans should be the overall long-term effect of Rowland's decision to raise taxes.  The record shows that when Connecticut Chief Executives raise taxes, their party ends up abdicating the Governorship in the subsequent election (see Rowland's predecessors: former Governor Bill O'Neil and former Governor Lowell Weicker).

Of course, we also know that Connecticut residents have short attention spans and fail to nominate or elect representatives with a due sense of fiscal responsibility; Connecticut residents tend to opt for philosophical mediocrity in their elected officials.  Witness a State House and State Senate full of liberal Democrats whose only known remedy to every problem is to increase spending and raise taxes.  And yet hear a state populace complain bitterly about being overtaxed.  Yet the two don't seem to add up.

However we may characterize Democrats (expensive creatures to start), Rowland's decision to raise taxes will present voters with the dilemma of trying to identify a clear difference between Republicans and Democrats at the macro-level, thereby giving the edge to the incumbents, which in this case leads to another Democratic congressional majority in 2005.

Rowland can be credited with taking a page out of Lowell Weicker's playbook - Rowland isn't the only Governor who pledged not to raise taxes (so indirectly, of course) and did so immediately after winning office.  Governors understand that voters have little recourse until the end of their term.  And Connecticut party leaders understand that only the liberalist of Republican candidates end up as the approved candidate for Governor (those that we are told:  "work well with the other party"), thereby damning us of sound mind to make the choice between left and quasi-left.   

As the details are forthcoming about the Governors tax increase proposal, we will sit with baited breath, waiting to find out why we've been sold out, and how much it will cost each of us.   

And wonder… when will Connecticut residents wake up?  And when will Republicans in Connecticut be true to their principles?

* * *

Address by Governor John G. Rowland
On His Plan to Balance the State Budget

    Good evening.

    I asked for this opportunity to address you tonight, to tell you about actions I am taking to balance the state budget. We have tremendous economic challenges facing us, and we need to address them together.

    The national economy has affected the budgets of almost every state in the country. Some states are facing very serious deficits - some as high as ten and twenty billion dollars.

    I am pleased to report that Connecticut is in far better financial shape than most other states. Our economy is fundamentally strong. But the national economy has hurt Connecticut - there is no question about that.Connecticut's deficit is manageable - IF we address it now.

    As President Lincoln said, "You can't escape the responsibility of tomorrow by evading it today." Tonight, I approach the budget with two basic principles in mind.

    First, to keep our economy strong, government must live within its means. And second, as elected representatives of the people, it is our responsibility to make the tough choices. You have a right to expect action. And so do I.

    While the economy was growing, many worthwhile state programs were expanded. We invested in education for our kids, including our universities, in healthcare for our parents, and improvements in our environment. But now that our economy is growing at a slower rate, we must make adjustments - just like any business or family.

    As governor, it is my responsibility to face the reality of Connecticut's financial situation. Our budget is out of balance - and we must take steps to correct it. This year, we have a deficit of about $500 million dollars - about 4 percent of the overall budget. The only responsible way to address this deficit is with discipline and fairness.

    I have to make the same kinds of decisions about the State budget that you have to make about your own family budget. When your income is reduced, you have to cut back on your expenses.

    A month ago, I asked the state employee unions to be part of the solution - because state employee contracts are a big part of state government. State employee salaries and benefits account for one-third of the total state budget - that's more than $4 billion dollars per year.

    As the Hartford Courant reported this morning, Connecticut state government employees are among the highest paid in the country. Over the past 8 years, their average salaries have risen by more than 40 percent.

    When I first met with the state employee union leaders to discuss wage and benefit concessions, I told them I wanted to avoid lay-offs. I proposed a fair compromise that would keep everyone employed. Tragically, the union leadership rejected my offer and failed to even consult their own members.
It is with great disappointment and regret that I have to announce the layoffs of 2,800 state government workers.

    This is not an action I want to take. But as Governor, I must do what is best for our state and all of its citizens.

    Many state employees, including some who have written letters to me, strongly disagree with their union leadership on the issue of concessions and job security. Most state employees would give up a raise to keep themselves and their colleagues on the job. But their union leaders have made the choice for them.

    Having lived through the recession of the early 1990s, I know economic downturns do hurt. Layoffs are not painless. Job losses affect families and they affect our economy. I have directed our State Labor Department to help all the affected workers find new employment or job training.

    Last month, I asked the legislative leaders to work with me to reach a bi-partisan solution to the deficit - a solution that asked something of everyone. I said everything would be on the table, including wage concessions, spending cuts, and even some new taxes. Unfortunately, during this past month, there has been no agreement on any spending cuts. There has been no bi-partisan plan - and there has been no action by the legislature.

    As a matter of fact, many legislators have asked me to submit a plan. So tomorrow, I will submit my balanced budget plan to the General Assembly. My balanced budget plan is fair. To close the $500 million dollar gap in our budget:

o Spending will be reduced by 200 million dollars.

o Taxes will be increased by 200 million dollars. The tax increases will include an increase in income taxes paid by those earning more than $1 million dollars a year.

o And I will seek at least 100 million dollars in employee contract concessions OR an additional 100 million dollar cut in state aid to cities and towns by December 31st .

    This plan strikes a balance between spending cuts and tax increases. It includes tax increases I have opposed throughout my time in public service. But we are facing a budget crisis and I offer this plan in the true spirit of compromise.

    I am also announcing tonight that I will call the General Assembly into Special Session on December 18th to vote on my balanced budget plan. By law, Connecticut must balance its budget. If we fail to address the deficit now, we will be mortgaging our children's future. This is simply unacceptable. We have a responsibility to ourselves and to the people we serve.

    Leadership sometimes requires hard choices, but we will get the job done. I will also remind the newly elected legislators who will be sworn in on January 8th that the deficit for next year is $1.5 billion dollars. That is why it is urgent that we pass the balanced budget act on December 18th, so we can begin the new year on the right foot.

Thank you for listening.