What a difference a few months can make! At the outset of this legislative year, Governor Malloy bubbled with optimism. There was going to be a big $506 million surplus, we were told -- enough to "give" voters a one-time (election year) tax rebate of $55.
Malloy's optimism was not unprecedented. When the state Senate passed his 2011 budget -- containing the largest tax increase in state history -- he asserted, "It was a vote for an honest budget, one that’s balanced with no gimmicks, and one that will stabilize the state’s finances and lead to our ultimate goal: job creation" -- and once even characterized its passage as a cause for "celebration." Because of that budget, Connecticut citizens confronted tax increases on more than 50 items in different categories, averaging more than $700.00 per year per person.
In 2011, for the first time, state sales tax was imposed on previously tax-free items, including non-prescription drugs; clothing and shoes under $50; pet grooming; automotive towing and storage; limousine rides; manicures; pedicures; repairs of small planes; and cosmetic surgery. The retail sales tax increased to 6.35 percent; the maximum state income tax increased to 6.7 percent. Dismissing the widespread concern about the unprecedented onslaught of taxes, Governor Malloy commented:
[The tax increase] was actually passed three months ago, and people certainly had notice that it was coming, and for the vast majority of Connecticut citizens it will have little or no impact, and for the people that it will have an impact, a lot of them fall into wage or income brackets where I think they can handle it.
But sadly, all Malloy's happy talk -- about this year's $55 rebate as well as his 2011 tax increase -- simply hasn't stood up to reality. Three months after announcing the $55 refund with great fanfare, Governor Malloy dropped the idea. The projected surplus disappeared; projected state income tax collections are smaller than forecasted. The governor's much-touted projected budget surplus shrank by more than $461.5 million between January and April -- and deficits of more than $1 billion are forecasted for future budget years.
Contrary to the governor's upbeat predictions, the 2011 tax increase hasn't succeeded in fiscal stability, and it certainly hasn't achieved Malloy's self-proclaimed "ultimate goal" of "job creation" -- quite the opposite! In 2012, when the corporate surcharge doubled, Connecticut became the only state in the nation where the economy actually shrank. The same year, Barron's declared Connecticut to be the in the worst fiscal shape of any state. And in 2013, the Tax Foundation found Connecticut to have one of the worst business climates in the country.
By February 2014, nearly 11,000 fewer people were working than when Governor Malloy took office. What's more, there were 60,000 fewer people in the labor force than when the Governor was sworn in.
The Governor's recipe of high taxes combined with big spending hasn't created jobs; it's created a mess. No wonder nearly half of Connecticut's residents (49%) say they would move to another state if they could -- the highest percentage in the country (except for Illinois).
All of this must be coming as a terrible surprise to the Governor. Just this month, gobsmacked by the "incredible shrinking surplus" resulting from the (apparently) unforeseen reduction in tax collections, the Governor huddled with Democrats in private to create a new budget.
And that, perhaps, was the final insult. After raising our taxes, and promising (then withdrawing) some paltry tax relief, our elected officials engaged in a final budget process designed to keep taxpayers in the dark about how they want to spend our money. Enough.