The final day of the General Assembly’s legislative session is always a mad dash as legislators rush to finish their work before the bell strikes midnight. The 2015 legislative session was no different, but, as has happened in past years, the General Assembly was not able to complete all of its work. As such, General Assembly members will return to the State Capitol for a special legislative session at the end of June. At the top of their to-do list will be the completion and passage of the budget implementer bills. Although both chambers passed the next biennial budget, neither chamber was able to vote on the bills that actually implement the budget.
At the start of the session, Governor Dan Malloy presented a budget that relied almost exclusively on cuts to important programs. CSEA members – through testimony at public hearings, direct lobbying of legislators, participation in actions at the Capitol and in district, among other things – played an important role in moving the General Assembly towards a budget which, not only, protects vital services, but also asks our state’s wealthy residents and profitable corporations to pay their fair share. The budget passed by both chambers of the General Assembly reflects the work and involvement of CSEA members.
The budget bill fully funds pensions and health care for state employees and retirees. It contains no layoffs, consolidations, or additional concessions from state employees; and, it boosts aid to municipalities and boards of education, in part, by diverting .5% of sales tax revenue into a new municipal revenue sharing account. Additionally, the budget takes an important step towards making Connecticut’s tax system a little bit fairer by making changes to the car tax, corporate taxes, and income tax rate for high income earners.
Starting on July 1, car tax rates will be capped at 32 mills; this will be lowered to 29.36 mills in 2017. The diversion of sales tax revenue will also be used to help municipalities make up for any lost revenue. No town will be required to raise their rate to the level of the cap, but if you live in a municipality that does have a higher car tax, you’re getting a tax cut.
Over the last thirty years, the tax burden in the United States has shifted away from the wealthy and large corporations – at the same time as their wealth and profits have massively increased – and towards working people. The budget passed by the General Assembly does two important things when it comes to correcting this shift. First, the state income tax will move to 6.99% for individuals who earn $250,000 and couples who have joint income over $500,000. Second, the budget calls for Connecticut instituting a system of combined reporting. Combined reporting stops companies from, effectively, hiding profits in other states. For corporations with subsidiaries in multiple states, they will now have to add together the profits of all of its subsidiaries, regardless of their location, into one report. From this “combined report” a more accurate picture, and thus a more accurate tax obligation, can be determined for in-state profits.
Despite the doomsayers who believe that Connecticut is hostile to business, the truth is far different. Currently, somewhere between 58% and 66% of Connecticut companies pay no income tax. The total state and local tax burden on business in Connecticut was tied with North Carolina for second-lowest in the nation, trailing only Oregon. Connecticut’s tax burden on business was 27 percent lower than the national average. Total taxes on business in Connecticut, as a share of total taxes levied by state and local government, at 28.9 percent, were the lowest in the country — standing at 36 percent below the national average. Corporations and rich people have taken advantage of a tax system that asks more and more from people who work for a living, while asking less and less from those who can afford it.
For nearly 25 years, CSEA members have fought for a system of true health care pooling that would allow municipalities and boards of education to join the state employee health plan. A few years ago, CSEA members achieved a partial victory with the passage of legislation that created what came to be known as the Partnership Plan. The Partnership Plan, which provides the same benefits as the state plan, has not provided the savings of true pooling because instead of charging the same rates, the Partnership Plan sets rates based upon individual and risk experience of a municipality or board of education. In the closing weeks of the legislative session, the House and Senate passed Senate Bill 913 which will allow municipalities and boards of education to join the state employee health plan at state employee prices. This will result in, both, access to improved health plans and significant savings for local governments and the overall state employee health plan.
In the run up to the special legislative session, Governor Malloy has proposed making changes to the budget passed by the General Assembly. These proposed changes, which include a one-year delay in combined reporting and another round of budget rescissions, would mean an additional $237 million in cuts. CSEA members will continue to fight for a budget that is balanced not on the backs of those who can least afford it, but instead asks those who can to pay their fair share.