Editorial 3 takeaways from state revenue projections
Hearing the good news on the uptick in Connecticut’s revenue projections is like getting an extra serving of turkey on Thanksgiving. We are grateful. But though the numbers are hearty, this is no gravy train, folks.
Tax receipts for the current fiscal year, which ends in June, look to be about $16 billion, $87 million more than expected, according to the state Legislature’s non-partisan Office of Fiscal Analysis and Gov. Dannel Malloy’s budget staff.
Thanks to the surge in tax revenues, the state headed into fall with a healthy $1.2 billion rainy day fund and another $900 million could be added by the end of June. For perspective, less than a year ago the state had only about $212 million in reserve.
But — and this is a huge but — because of bills that are due, such as pension payments and other liabilities, Connecticut will still have a $2 billion deficit in the next fiscal year and $2.4 billion the year after that, unless adjustments are made.
Here are three takeaways from the good-news tax receipts:
1. Connecticut is going in a good direction. Overall revenue projections for the upcoming biennium are upgraded by $800 million. Keep in mind, just four years ago Malloy’s budget director, Ben Barnes, had warned that the state was in a “permanent fiscal crisis.” Tuesday he called the revenue trend “a whole lot better than we’ve had in many, many years.”
2. Connecticut must stay the course. We still have bills to pay. But we shouldn’t need to reach for desperate quick fixes. This means do not rush for tolls — in fact, stop the $10 million study Malloy borrowed money for in the fall, circumventing the will of the General Assembly. Gov.-elect Ned Lamont supports a trucks-only highway toll, such as Rhode Island enacted, but let’s see how lawsuits there turn out. No rush to jump on legalizing recreational marijuana without carefully weighing the consequences.
3. The notion that the income tax in Connecticut could be eliminated was folly. Income tax from paycheck withholding created most of that $87 million boost in projected tax receipts and accounts for two-thirds of tax revenue. Empty political promises aside though, there is room to examine the overall structure, including corporate and sales taxes, as outlined in the Commission on Fiscal Stability and Economic Growth’s report last March.
Connecticut’s new governor will have just over a month after taking office to present a biennium budget to the new General Assembly. This is no easy task, but must be undertaken with no gimmicks and no threats. Municipalities are still chafing at Malloy’s earlier suggestion to push a whopping third of teacher pension costs onto towns.
Just maybe in this Thanksgiving season, we can pause from bashing Connecticut as a place to leave and instead appreciate what we have here now. Sure, it’s not time to indulge in dessert yet, but the buffet is fuller than before.