Don't Make the Poor Pay

May 26, 2002 | Hartford Courant |

HARTFORD, CT -- Watching Connecticut's budget challenge with the benefit of a little distance and historical perspective, I see the state's choices as stunningly clear:

Balancing the budget on the backs of the people who have benefited the least from the economic boom of the '90s makes no sense. Asking those who have been the big winners of the past decade to contribute their fair share is a sound approach for the long term.

The last decade has hardly been one of free-spending governmental activism. State employment in Connecticut has increased by only 6 percent since 1994, almost all of it in corrections. Bonding for housing has declined from $125 million to $30 million. Rental assistance expenditures have gone from $18 million to $14 million. State spending on local education remains a subpar 41 percent of all education expenditures.

Who has benefited in the state? The biggest winners in Connecticut have been its wealthiest citizens. Although Connecticut's per-capita income increased by a nation-leading 9 percent from 1990 to 2000, according to census data released this past week, household income in 102 of Connecticut's cities and towns actually declined - in Hartford by 16 percent. These results reaffirm a recent study by Connecticut Voices for Children, "Pulling Apart in Connecticut," which showed that the income of the top 20 percent of Connecticut's residents increased by 21 percent in the last 10 years, while the poorest fifth dropped by almost 20 percent. Connecticut's income gap has increased more than any other state's.

The '90s have also been a decade of extraordinary reductions in business taxes. In 1991, the corporate tax rate was 13.8 percent; today it is down to 7.5 percent. In addition, a raft of targeted tax benefits for particular industries, sometimes for particular companies, has been passed. With all the breaks and reductions, the share of taxes paid by corporations has gone from 19 percent of the state's revenue to 7 percent - an unbelievable 60 percent reduction.

All this largesse was made possible by the boom. But it was also made possible by the courageous decision to enact a state income tax, made in 1991 by Gov. Lowell P. Weicker Jr. and legislators who understood the need for long-term reform and who also understood that it was right - defying conventional wisdom - that the wealth of the state be fairly harnessed for the benefit of all.

The fight was hard, the criticism fierce, but the state was well served. The income tax has given the state fiscal stability and balanced budgets with modest spending growth, and has made multiple other tax reductions possible. In fact, many of the wealthiest taxpayers have actually experienced decreases in state taxes as a result of the elimination of the capital gains tax.

But now the boom is over, at least for the present. Sacrifices must be made. Where should the legislators and the governor begin?

One Connecticut, a broad coalition of advocates, human service providers, faith-based groups and unions, has given the state a usable map to follow. Any budget passed will certainly include significant spending cuts; indeed, many cuts affecting education and essential health and human services have already been made. But One Connecticut's proposals for a 1 percent surcharge on the state's highest incomes (which should be permanent, not temporary) and for holding back on just some of the business tax reductions and loopholes enacted in the last decade make eminent sense. These proposals should be a cornerstone of the final package.

The alternative is deeper and deeper cuts in services, fewer early-childhood programs, fewer after-school programs, less affordable housing, more broken families. The alternative will also include a sleight-of-hand tax hike, in the form of property-tax increases, which will become necessary in municipalities whose education funding from the state will be reduced. Enough is enough.

In vetoing the budget, Gov. John G. Rowland said it was unfair to single out those taxpayers earning more than $1 million per year. Poppycock. It is simply asking those people who gained the most to pitch in and help when the going gets tough. It's not "class warfare"; it's common sense.

Connecticut is not alone in facing budget crises; states across the nation are grappling with the same issues. But Connecticut's choice is clear:

It can place the burden of balancing the budget on those least able to shoulder it, force families to struggle, watch the income gap continue to widen and the budget gap worsen - and then come back and have to do it all over again next year.

Or Connecticut can lead by rejecting the conventional wisdom that tax cuts, deregulation and cuts in programs for the poor constitute the only viable politics, and that the dangerous trend of increasing income inequality is both inevitable and acceptable.

It's time for real leadership. The experience of 1991 proved that when political leaders stand up for what is right, people accept it and appreciate it. Let's hope the legislature recognizes that lesson and helps lead our state to a more stable, more balanced and more compassionate future. Maybe even the governor can see the light, which shines with ever-increasing intensity.

Miles S. Rapoport, former secretary of the state of Connecticut, is president of Demos, a New York research and advocacy organization.

 

 

But Connecticut's choice is clear:

It can place the burden of balancing the budget on those least able to shoulder it, force families to struggle, watch the income gap continue to widen and the budget gap worsen - and then come back and have to do it all over again next year.

Or Connecticut can lead by rejecting the conventional wisdom that tax cuts, deregulation and cuts in programs for the poor constitute the only viable politics, and that the dangerous trend of increasing income inequality is both inevitable and acceptable.