State Revenue Semantics

Some would say Governor Dannel P. Malloy was a man of courage for vowing not to raise taxes going into FY2014, where a $1.2 billion revenue shortfall awaits him. And it seems he is undertaking this daunting mission armed only with a fertile imagination and some well-honed semantics.

According to the state’s Office of Fiscal Analysis, the governor is proposing to cover just 64.1 percent of the deficit with spending cuts; the other 35.9 percent must come from revenue increases that do not technically qualify as taxes. That includes things like the extension of current taxes that were due to expire, including a tax surcharge on corporations, electrical generation taxes, and the reduction of the earned income tax credit. The end result is tax money, coming out of the pockets of taxpayers that gets counted as $160 million in revenue, without a penny of it counted as a tax increase. It is a testament to the power of words.

Other state revenues are coming from transfers from the transportation fund and accounts set up for stem cell and biomedical research. And then there is the “creative financing,” or “gimmicks,” depending on which arrow you wish to pull from your semantic quiver. These include an amnesty for tax delinquents — the fifth since 2000 — temporarily waiving fees and penalties in an attempt to raise $25 million in uncollected taxes. Then there is the plan to auction off the accounts of 800,000 electric consumers to electricity generation firms looking for a quick customer base in exchange for discounts, while the state collects $80 million from the utilities for the transaction. Everyone is supposed to win under the scheme, except, perhaps, the consumers who might want to participate in an electric generation marketplace free of state interference.

To his credit, the governor is trying not to simply shift budget imbalances on to property taxpayers. He is continuing his support for municipal aid. But even his bold move to eliminate most vehicle property taxes has not specified how towns and cities would recover the lost revenue.

Not to be outdone, state legislators are attacking the revenue shortfall with unabashed calls for tax increases on corporations and the wealthy, and the reinstitution of highway tolls in the state, including I-84 at the New York state line. Coming on the heels of a record $1.5 billion state tax hike two years ago, all this new tax talk seems a bit audacious, or tone deaf, depending again on your semantic pleasure.

The vice chairman of Newtown’s Board of Finance did some calculations earlier this month on what that retroactive state tax increase in 2011 cost Newtowners. The average local taxpayer paid the state an additional $1,027; townwide, an additional $12 million was redirected to Hartford. For a town that routinely rejects budgets over expenditures of a few hundred thousand dollars, the state’s continuing appetite for additional tax revenues seems grossly disproportionate.

In the end, someone always has to cinch the belt even tighter. This year, it would be nice if it could be state government itself, and not the taxpayer.

More stories like this: taxes, Malloy, state budget
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