Saturday, February 26, 2011

Governor Malloy's budget hits working families hard.

I have been reluctant to write or comment about Governor Malloy's budget for a variety of reasons. Mostly because it has taken myself and my staff about a week and half to pour through the numbers and  to listen to the rationale behind the policy decisions that were made in the budget.

It has been stated by the press and the editorial page writers that the budget protects cities and towns from significant cuts. This is only partially correct. Cities and towns have the same challenge that the state has as it relates to structural budget problems-- and the Governor has taken a pass on addressing those structural problems.

Malloy's budget does nothing to strengthen the bargaining position of communities that are going to have to make core changes to pensions and health care benefits for their employees. Without a recognition by the State Legislature that Mayors and First Selectmen do not have the flexibility to alter the contracts that are currently being negotiated, the municipalities continue the march towards financial calamity--even with the new revenue enhancers that the Governor's budget provides for cities and towns.

The Governors budget does not address the issue of unfunded mandates and their impact to Danbury and the surrounding communities. The Governor should have proposed a repeal of many mandates and should have agreed to veto any new unfunded mandates that are approved by the Legislature.

In addition, the Governor eliminated an important reimbursement program that the state provides called the Manufacturers Machinery Exemption. This grant reimburses cities and towns for a tax exemption that they are required to give for certain types of manufacturing equipment.

For Danbury, this is a $1.4 million dollar cut in state aid.

Then there are the taxes. The taxes, the taxes, and the taxes. For cities and towns the Governor has proposes increasing a little known tax that the state charges on municipal employee health care plans. Not sure what the tax is even for, but the cost for providing health care for municipal employees continues to escalate, the Governor just added to their problem.

Finally there are critical components to this budget that simply don't add up.

The Governor has proposed 1 billion dollars a year in state employee concessions. That will be a difficult task to complete. Concessions of that magnitude would amount to a give back of approximately twenty thousand dollars for each state employee. An almost impossible feat. Expect state layoffs at some point this year.

The elimination of the property tax credit and the addition of the earned income tax credit has left people scratching their heads.

The property tax credit is a much utilized five hundred dollar credit that the working men and women of Connecticut can take on their state income tax. This credit has been eliminated. What does this mean? It means that Governor Malloy just raised property taxes by as much as five hundred dollars on some of the hardest hit families during the current recession.

The earned income tax credit will require the State of Connecticut to, get this, give up to seventeen hundred dollars to people who don't pay any state income tax. That's right, we have a 3.5 billion dollar deficit, but, we can find the money to give tax dollars to people who don't pay any taxes to begin with.

Confused? Me too..

To be continued.....

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