Twenty-five years ago Connecticut Gov. Lowell Weicker gave a speech explaining how the income tax would fix Connecticut’s problems. He said earlier tax increases had failed because the revenue was “gobbled up in orgies of spending.”
Weicker intended the new income tax to break the mold and actually solve Connecticut’s fiscal challenges. When he announced his support for the income tax he said, "I feel great." Reading his speech from May 15, 1991, and comparing it to today’s budget woes suggests how far the income tax fell short.
“What I can promise is an end to delusion – and now,” Weicker said. “I'm not coming back to impose more cuts on the young, the old, the frail and I'm not going to nibble taxpayers anew each year.”
Despite Weicker’s promises about the income tax – and similar hopes that came along with two larger tax increases, in 2011 and 2015 – this week the General Assembly passed another budget that cut services while continuing to spend more.
In his speech, Weicker referred to the new income tax as part of “revenue reform.” He outlined four proposals to control spending, including an early version of the spending cap. Shortly after proposing them, he admitted their shortcomings. “You should know that I am as wary of the efficacy of such limitations on government as the people of Connecticut are on the advisability of an income tax.”
And rightfully so. Previous tax increases had already failed to solve Connecticut’s budget problems. “The $1 billion tax increase of 1989, which along with the surplus, disappeared overnight in a welter of spending,” Weicker said. “The companion fear is over larger revenues generated by an income tax also being gobbled up in orgies of spending.”
In addition to the fallout from their history of irresponsible spending, Connecticut lawmakers are also facing the consequences of high taxes causing significant outmigration that pushes $60 of income out of the state each second.
Weicker’s income tax plan didn’t solve Connecticut’s fiscal problems, but his words paint a clear picture of them the remains accurate even 25 years later.
“The fact that Connecticut has been victimized by fiscal sleight of hand in the past – and has lived to tell about it – is no reason to play double or nothing. Rather, this is the year for truth, not politics, to drive the budget,” Weicker said.
“Connecticut is a fiscal bedlam. Nothing makes sense because nobody acted on sense. If the fallout from such irresponsibility were just on my generation's shoulders, that might be an acceptable trade-off for budgetary insanity. But the consequence of our present course falls on the most vulnerable and they should be the beneficiaries of power – not its victims.”
GOVERNOR LOWELL P. WEICKER JR. ADDRESS TO THE JOINT CONVENTION OF THE GENERAL ASSEMBLY HOUSE OF REPRESENTATIVES, STATE CAPITOL
MAY 15, 1991
Madame President, Mr. Speaker, Honorable Senators and Representatives, people of Connecticut, thank you for allowing me a few minutes of your time.
Over three months ago I had the privilege of addressing you on the finances of Connecticut. It was a difficult moment for all of us. In a matter of moments, the raw truth of this state's fiscal report card turned our world upside down.
For me, the occasion had the added downside of immediately launching the administration into a bare-knuckles fight against a deficit and recession without the benefit of a getting-to-know you waltz with the legislature and the people of Connecticut.
But for anyone confronted with the grossness of Connecticut's deficit and unemployment figures, with the bleakness of Connecticut's future, to have acted otherwise would have been abdication of responsibility to a degree never seen in this state.
However gross the figures and the trend of those figures back then, they were a drizzle compared to the hurricane that slams us now.
With only a few weeks left until the end of the regular legislative session, it is important for each of us -- governor, legislator and citizen -- to make decisions necessary to secure an honest future for our state.
For me, that will entail recognizing a legitimate concern expressed in discussions over the budget with neighbors and legislators -- specifically, the matter of controls on spending.
My own view on automatic governmental pilots is well known -- I'm against them.
But two matters unique to Connecticut's past and present make it clear that revenue reform must be accompanied by an attempt to check future spending. Those matters are the $1 billion tax increase of 1989, which along with the surplus, disappeared overnight in a welter of spending. The companion fear is over larger revenues generated by an income tax also being gobbled up in orgies of spending.
Apparently the fact that, for the first time in modern memory, the budget represents a 2.3 percent minus growth in spending, is not sufficient to allay fears of over-spending in the future. That is as much a fact of public opinion as are the facts of the deficit and I accept it as such.
Therefore, I am recommending additions to the budget package calling for spending controls:
Point number one, the increase in spending by the State of Connecticut shall be no greater than the growth in personal income as measured by a 10-year rolling average.
Point number two, if there is a surplus, an amount equal to one percent of general fund expenditures shall be set aside as a reserve against contingencies. Said monies will be released only upon approval by a two-thirds majority of both houses. Exceptions to the limitations on spending are federal mandates, court orders and debt service.
Point number three, all revenues in excess of those we have identified will be rebated to income-taxpayers on a percentage basis.
Finally, bonding shall not exceed 1.6 times the amount of general fund tax revenues.
This system keeps government within well-defined and generally accepted bounds. It then concedes, to the taxpayers, a pre-emptive right to spend a surplus, if it occurs, as they deem fit.
Corporate taxpayers and consumers are getting huge tax cuts up front in my budget. For that reason, and with no limitation on future tax cuts, it is the new taxpayer -- the income taxpayer -- who benefits from the rebate.
In order that there be no gimmicking our present predicament or misleading the public, until we pay off the 1991 debt -- now at $834 million dollars -- there is no possibility of immediate rebates.
Within the last few hours of coming to speak before you this afternoon, I received a communication from the leadership – much of the leadership -- of both the House and the Senate, Democrat and Republican --and, as has been noted by the press – this basically calls for my cooperation in a bi-partisan plan of spending controls. The letter started off -- "In the midst of the most serious fiscal crisis in Connecticut's history, traditional partisan differences over the direction of state financing and spending have given way to a unique and precedent-setting bi-partisan partnership with respect to instituting serious and permanent spending controls.
Republicans and Democrats, liberals, moderates and conservatives, have joined together on this issue that is critical to Connecticut's future." It then spells out some of the thinking within this group and ends with, "We are confident of your support in these measures. Working together we truly can seize a defining moment for Connecticut, its citizens and, most important, its future--Connecticut's children." It's signed by Del Eads, Senate Minority Leader; John Larson, Senate President Pro Tem; Con O'Leary, Senate Majority Leader; Ed Krawiecki, House Minority Leader and Dean Markham, a Deputy Speaker of the House. Upon receipt of the letter I gave serious thought to its content--to its request and to its analysis of the seriousness of the crisis and also giving thought to what we need to do--you and I--in terms of putting a budget together.
And so, my response is going to be on this platform here this afternoon. In order to move this process along and do what has to be done at the earliest possible moment, I am laying aside all of my recommendations on spending controls and am willing to accept in total the recommendations of the bi-partisan group from the Senate and the House.
Now, having said that--and that is an important piece of the budget package--it is also true that I have to date (which doesn't mean to say that others haven't tried) the only complete package when it comes to appropriations and revenues. And indeed, if I can walk the whole way in a bi-partisan effort to face this serious crisis correctly described in the letter, then I would hope that same leadership can do the same in terms of what it is that I have proposed.
And, I would hope that, with my budget plan on the table and with this bi-partisan plan of spending controls that is on the table, the leadership can work with the Governor, even through this week-end, and that we can produce a budget for the State of Connecticut by next week.
You should know that I am as wary of the efficacy of such limitations on government as the people of Connecticut are on the advisability of an income tax. However wary we both might be of such choices, the facts of economic disaster bearing down on Connecticut demand we choose -- and in honest and creative ways. A look at the crumbling world around us should have anyone, including this governor, grasp the conclusion that what used to work doesn't work.
A leap of faith is going to be required if the old perceptions and shibboleths, which ill serve the state, are to die.
The fact that Connecticut has been victimized by fiscal sleight of hand in the past -- and has lived to tell about it -- is no reason to play double or nothing. Rather, this is the year for truth, not politics, to drive the budget.
With an $834 million real deficit and a $2.7 billion projected deficit, the largest percentage in the nation, a record number of business failures and over 100,000 unemployed, I think it safe to say that it wasn't an excess of truth or vision that has put us in a corner.
The voices needed to speak are outside this chamber. I didn't come here to lecture anyone. As the head of this family called Connecticut, I'm here to ask for help -- for ourselves.
People of Connecticut, you are going to get exactly what you want. Facts are not in dispute. It's the comfort level of dealing with the facts and the truth the solution demands, that is proving so nettlesome.
I can't promise victory without sacrifice. No generation of Americans has thought that, much less achieved it. And already, many in Connecticut are sacrificing -- some by choice, some by force of the state's prostrate condition.
What I can promise is an end to delusion -- and now. I'm not coming back to impose more cuts on the young, the old, the frail and I'm not going to nibble taxpayers anew each year.
The choice is a $450 million investment in new jobs by reducing business taxes or living with chronic recession. The choice is going from the highest to the lowest sales tax in the region, saving Connecticut consumers $920 million in taxes while boosting the state's retail sales.
The choice is having 58,000 non-residents paying income taxes to Connecticut, the state where they earn their income or paying nothing to Connecticut.
The choice, for families earning less than $30,000, is paying less taxes than they are now or paying more taxes on the goods and services they need to live.
The choice for 330,000 out of 370,000 senior citizen families is less taxes rather than more.
The choice for the family out of work is no income tax to the state compared to a high sales tax collected on most purchases regardless of whether you have a job or not.
The choice is $300 million in taxes now payable to the federal government staying here in Connecticut. As of 1986, state income taxes are deductible from federal returns. Sales taxes are not.
Make no mistake about one thing. Under any plan offered to date, the people of Connecticut will pay higher taxes. The questions are will those taxes be fair? Will they be adequate to address the future, not just the past? And will they be minimized by federal subsidy and out-of-staters paying taxes to Connecticut?
The choice is between living with our problems and leaving our problems. Between more of the same -- now you see it, now you don't --and a carefully planned budget based on stable revenues and controlled expenditures.
Connecticut is a fiscal bedlam. Nothing makes sense because nobody acted on sense. If the fallout from such irresponsibility were just on my generation's shoulders, that might be an acceptable trade-off for budgetary insanity. But the consequence of our present course falls on the most vulnerable and they should be the beneficiaries of power – not its victims.
My friends and neighbors of Connecticut. I need you. I don't have the troops to ram the truth home. And I don't have the will to execute the duties of my office in a neck saving way.
It's not looking in the mirror and seeing a state in disarray that need give any of us permanent concern. We have the power to change the reflection any which way.
It's looking into the eyes of children, the elderly, the unemployed, the ill, the disabled, and knowing that we did less than our best.
So please, Connecticut, speak. The best, the best. We expected it. With your insistence, we'll bequeath it.