Reducing state income tax rates a year from now, raising state spending by only 5.3% over two years, and preventing state government from spending all the money it can get its hands on, thereby forcing state government to save during good years, Governor Lamont’s state budget proposal is far more conservative than might be expected from a Democrat.
As a result it seems likely to be faulted if not assailed by the leftist majority of the party’s members in the General Assembly, particularly for not giving the teacher unions as much more money as they would like.
“I want a sustainable tax cut that we can support in good times and not-so-good times,” the governor said in his budget address Wednesday. “We’ve had a number of false starts — on-again-off-again tax cuts. Not this time.”
But the left wing of Lamont’s party doesn’t want tax cuts to be “sustainable.” It wants to enlarge government’s claim on the economy and to shrink the private sector, and though the governor criticized “on-again-off-again” tax cuts, his budget would again postpone repeal of the 10% surcharge on the corporation tax, which was to happen this year.
The proposed income tax cuts give the impression of prosperity for Connecticut. But if the state can afford them, it is mainly because of the billions of dollars in emergency financial aid lately received from the federal government — a major cause of inflation nationally — and because of the increase in state tax revenue that has been produced by rising prices and asset values.
That is, the proposed income tax cuts are not the result of more efficient management of state government but a small apology to state residents for inflation, which is essentially a tax.
The governor tried to conjure an image of prosperity in Connecticut. “For the first time in over a generation,” he said, “Connecticut has enjoyed strong economic and population growth.”
No, it hasn’t. Connecticut has had little economic growth compared to other states and the second worst population growth, after only Vermont.
The governor went on to undermine his image of prosperity.
“The income and wealth disparity in our country has gotten worse over the last generation,” he admitted. “Increasing the minimum wage, debt-free community college, and no-cost workforce training that allows you to get a higher-paying job in less time will all help address income disparities.”
Indeed, the governor’s many proposals for new or increased state subsidies for groups considered needy and deserving suggested a state where fewer people are able to support themselves.
There will be a big increase in the state’s earned income tax credit, money for people who have more children than they can properly support. There will be more subsidies for day care, including reimbursements to businesses that offer day care to the children of employees.
There will be more subsidies for medical insurance for the poor and for businesses that help their employees repay student loan debt — the latter subsidies constituting another confession that higher education is overrated and overpriced and that government will do nothing about having driven up the cost.
With 25% of Connecticut’s students chronically absent from school, state government will spend another $7 million trying to lure them back.
And with tens of thousands of Connecticut children not being adequately fed at home, free school lunches will become universal.
The governor also proposes a program by which state government would pay a nonprofit organization to purchase, at huge discounts, as much $2 billion in seemingly uncollectable debt owed to hospitals by former patients, and then cancel the debt. The governor did not specify who will really take the loss here. But hospital losses for what is called uncompensated care tend to be recovered through higher charges to those who do pay for the care they get — other patients and their insurers.
Polls this week reported that, despite the prosperity preached in President Biden’s State of the Union address and the governor’s budget address, most Americans believe they are worse off financially than they were a year ago. More subsidies may be urgent in certain circumstances but they won’t produce lasting prosperity.
Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut. (CPowell@JournalInquirer.com)