December 2005

With the highest local-state-federal tax burden and one of the most ravenous spending habits in the nation, fiscal policy in Connecticut is disturbingly irresponsible — particularly given the state’s fragile economic health. Unfortunately, 2005 was a year that saw the Nutmeg State’s addiction to Big Government worsen. Tax hikes and spending increases were commonplace.

On the bright side, the grassroots rebellion against Connecticut’s excessive property-tax rates intensified in 2005. This resistance was surely a factor in November’s municipal elections, which saw a large number of incumbents thrown out of office.

Herewith, the Yankee Institute for Public Policy presents its awards for the best and worst in 2005 Connecticut fiscal policy.

ENEMY OF THE TAXPAYER, STATE

For signing a big-spending, tax-hiking budget for the 2005-06 fiscal year, the Yankee Institute gives its state-level “Enemy of the Taxpayer” award to Connecticut Governor M. Jodi Rell.

During the 2005 legislative session, the governor demonstrated no willingness to confront Connecticut’s longstanding fiscal problems. Instead, she embraced both higher spending and higher taxes.

Spending was boosted by a jaw-dropping 8.7 percent. And taxes raised/imposed on Connecticut’s beleaguered families included:

* a massive hike in the state’s tax on petroleum products — at a time when gasoline prices are sky-high

* a new death tax that encourages retirees to flee the state

* a reduction in the property-tax credit available to citizens with an income-tax obligation

* a new nursing-home tax — imposed as part of a complicated and misguided scheme to obtain more federal funding — that raises the state’s eldercare costs (which are already the highest in the nation)

While the legislature bears much of the blame for the 2005-06 budget — and deserves an honorable mention in this category — only the governor had the power of a statewide bully pulpit to stand up to tax hikes and runaway spending, and explain to voters why fiscal changes are badly needed. Unfortunately, Rell chose to continue the state’s unsustainable tax and spending habits.

ENEMY OF THE TAXPAYER, LOCAL

For inept management of their city’s high-school building project, former Middletown Mayor Domenique S. Thornton and the members of the Middletown High School and Vo-Ag Center Building Committee earn the Yankee Institute’s “Enemy of the Taxpayer” award at the local level.

Middletown’s new high school has been a debacle from the start. In 2003, the building committee named TBI Construction Company its construction manager, despite the firm’s involvement in the scandals that ultimately put former Governor John Rowland in federal prison. In January 2004, Middletown officials signed a “project labor agreement” with construction unions that limited competitive bidding and all but guaranteed a higher cost to taxpayers. In April 2004, Middletown’s Inland Wetlands and Watercourses Agency denied the school a permit for environmental reasons. (Five months later, a modified version of the project won approval.)

The latest blow to the troubled project struck this summer, when sealed bids for the high school were opened. Estimates were many millions of dollars more than the amount voters approved in 2003. Now the often-modified project faces even more redesign work, and it is all but certain that taxpayers will be asked to approve additional funding in 2006. There is reason for optimism, though: The city’s new mayor has pledged to abandon the project labor agreement and recently appointed new members to the building committee.

The cost overrun of Middletown’s new high school should come as no surprise. All over the state, school-construction projects are behind schedule and over budget. Unfortunately, these fiscal follies at the local level don’t just impact citizens with property-tax obligations. State revenues cover large percentages of school-construction projects, and thus every taxpayer in Connecticut is affected. School-choice alternatives are needed more than ever in the Nutmeg State.

FRIEND OF THE TAXPAYER, STATE State Rep. Kevin DelGobbo earns Yankee’s “Friend of the Taxpayer” award at the state level.

During the legislative session, he lobbied for a bill that would have finally enacted the state’s spending cap — a measure overwhelmingly approved by voters in 1992. As DelGobbo explained in January, “successive legislatures have purposefully ignored and thwarted the will of Connecticut voters by failing to adopt the cap as a constitutional provision.” The bill was referred to the Appropriations Committee, but was not even given a public hearing, much less a vote.

In September, DelGobbo proposed suspending the newly enacted hike in Connecticut’s petroleum-products tax. “The one thing state lawmakers can do right now is stop adding to the pain of high gas prices by rolling back the tax they dramatically increased this year,” DelGobbo told the Journal Inquirer. (Not surprisingly, legislators and the governor saw things differently, and ignored his request.)

For his commitment to spending restraint and tax relief, DelGobbo was truly a friend of Connecticut taxpayers in 2005.

FRIEND OF THE TAXPAYER, LOCAL

Save Westbrook, a taxpayer group fighting for fiscal responsibility in its town, is awarded the “Friend of the Taxpayer” award at the local level.

Westbrook has not approved a budget for the 2005-06 fiscal year — the only Connecticut municipality yet to do so. That’s largely due to the gutsy and indefatigable efforts of Save Westbrook. So far, the shoreline town has defeated four budgets, mostly in response to municipal officials’ refusal to make the cuts clearly needed to satisfy a majority of voters. Financial research and get-out-the-vote efforts by Save Westbrook have clearly had an impact.

QUOTE OF THE YEAR, STATE

“Having the millionaire’s tax reserved for a time when we hit a very rough patch in the state’s future is really a very good thing.”

In June, State Senate President Donald E. Williams explained to The Day that while hiking the state’s income tax wouldn’t happen this year, he took comfort in the fact that it was still available for future implementation.

Research has shown that steeply “progressive” state income-tax rates are associated with poor economic growth, and that raising taxes during an economic downturn is one of the most harmful things a state government can do. Williams and the powerful lobbying machine that continues to press for higher Connecticut income-tax rates continue to deny this research, in their never-ending quest for more tax revenue to spend.

QUOTE OF THE YEAR, LOCAL

“That kind of stuff I’m not interested in.”

That’s what East Windsor Board of Finance Chairman Paul Catino had to say in May, after a reporter asked him why town voters defeated a 9.3 percent hike in their property tax rate. East Windsor’s concerned taxpayers mounted a true grassroots effort to defeat the tax hike, and went on to defeat two more budgets before adopting a 2005-06 spending plan in July.

The Hartford County town was just one of dozens around the state that rejected — often by wide margins, and often more than once — tax-hiking budgets. While some municipal officials are sensitive to voter outrage over ever-higher property taxes, Catino’s comments demonstrate that all too many remain indifferent to the plight of local taxpayers.

BEST MEDIA COVERAGE

The Hartford Courant’s Christopher Keating has consistently shown a sophisticated understanding of fiscal policy in Connecticut. Not all his writing has measured up, but on several occasions in 2005 Keating demonstrated a grasp of tax and spending policies that too many of his colleagues sorely lack.

In April, Keating wrote a revealing article on the role healthcare costs (Medicaid and coverage of state employees) play in driving state budget growth. In August, he described how “legislative leaders have steered the award of [bond commission] grants for the political benefit of members, who can then claim credit with voters in their districts.” In October, Keating reported the outrage over the governor’s new death tax, and even allowed critics to suggest that by driving the state’s more affluent residents away, projections about the revenue the tax will raise might not pan out.

For these articles, Keating deserves the award for best media coverage of 2005.

WORST MEDIA COVERAGE

For their failure to objectively scrutinize the claims of the Connecticut Coalition for Justice in Education Funding (CCJEF), Connecticut’s education reporters — particularly the Hartford Courant’s Robert Frahm, the Connecticut Post’s Linda Conner Lambeck, and The News-Times’s Elizabeth FitzGerald — collectively earn the award for worst media coverage of 2005.

Time and time again, researchers have failed to find a connection between higher school expenditures and improved student achievement. The Texas Supreme Court recently rejected an attempt to boost school spending in the Lone Star State, concluding that “more money does not guarantee better schools or more educated students.” (One justice suggested that “more competition” would help government schools the most.)

But try telling that to Connecticut’s education reporters, who consistently fail to question the inaccurate assertions of the state’s government-school lobby. While sound bites from skeptics sporadically appear in education-funding articles, for the most part reporters serve as press agents for the teacher unions and politicians who relentlessly push for more spending on the Nutmeg State’s government schools.

Media coverage of the filing of CCJEF’s “education equity” lawsuit in November was particularly one-sided. Puff profiles of plaintiffs and talking points from the organization’s officials were the norm — not hard-hitting analysis of the questionable “research” behind the lawsuit. Theresa McGrath, the Yankee Institute’s education specialist, calls CCJEF an attempt to “legally coerce a failed policy.” However, the state’s education reporters ignored this argument, and chose to act as conduits for the costly myth that more school spending will boost student performance. They also continue to ignore the school-choice movement that is revolutionizing education in other states.

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