Clockwise, from upper left, are Rep. Vincent Candelora, R-North Branford; GOP Sen. L. Scott Frantz of Greenwich; and Democratic Gov. Dannel P. Malloy, in WNPR's studio. The Connecticut Mirror

The initial debate about Gov. Dannel P. Malloy’s tax rebate has been simple: Is he sharing a real budget surplus or buying re-election votes?

But the rebate also is a carefully crafted shield protecting Malloy from a problem he inherited, yet largely hasn’t fixed – the state’s underfunded transportation system.

“There were gigantic raids on the transportation fund” before his administration, Malloy said last week on WNPR’s “Where We Live.” “Did we end all of that at once? No. Will we end it by next year? The answer is yes.”

The governor took heat in July when motorists faced one of the largest increases in gas taxes in state history — about 3.5 cents per gallon — while all $60 million the state earned from it paid for programs unrelated to transportation.

‘Gas tax’ refund in name only?

In January, Malloy proposed a “gas and sales tax refund” of $55 to most taxpayers. Despite the title, gas revenues effectively contribute nothing toward the rebate, which is paid for using $155 million of this year’s $506 million surplus. Consider this:

  • The state’s retail gasoline tax is expected to raise just $2.7 million above the receipts anticipated in the current budget;
  • And, no extra revenue is projected from the wholesale fuel tax.

And the governor hasn’t proposed any mid-year spending cuts to transportation that might otherwise free up funds for a rebate.

This doesn’t mean the rebate proposal is illegal.

Officials can designate receipts from any tax – whether it produced a windfall or not – for a rebate. Despite the various designated funds, the state budget effectively is one pot of money with largely interchangeable resources.

But why highlight gasoline taxes if they aren’t a big factor behind the surplus that’s being rebated?

Rep. Vincent J. Candelora, R-North Branford, a veteran member of the legislature’s Finance Committee, says the “gas tax” component exists in name only, to take heat off Malloy. “The governor is going to dress up the checks that go out the door however he wants to curry favor with the voters,” he said.

Shortly after announcing the rebate, Malloy cited the $55 as worth more than any extra fuel taxes Connecticut motorists likely paid this year.

“There’s no question that there is a certain amount of public outrage” over a combination of rising fuel taxes and insufficient state investments in transportation, said Sen. L. Scott Frantz of Greenwich, ranking GOP senator on the Finance Committee.

Where does the
$155 million
Gas and Sales tax refund
come from?
Click right arrow
Alvin Chang and Keith Phaneuf / CT Mirror
Who’s to blame?

But Malloy, who was Stamford’s mayor from 1995 through 2009, is among those outraged, and the Democratic governor says Republicans shoulder much of the blame for that trend.

Republican Gov. M. Jodi Rell and the legislature in 2005 ordered five summertime tax increases to bolster transportation.

After increases in July 2005, 2006 and 2007 reaped an unanticipated windfall – and drove up gasoline prices – Rell and lawmakers postponed the 2008 increase. Instead they merged it with the last jump, which took effect in 2013, effectively making it two increases in gas taxes in one.

But while fuel revenues were pouring in, Rell and legislators spent nearly $1 billion of them on programs that were unrelated to transportation. And while Democrats controlled the legislature, Malloy says that Republican lawmakers – many of whom are still at the Capitol and are among his harshest critics – silently went along with Rell on one fuel tax raid after another.

Malloy tried to modestly reverse those raids in his first budget in 2011-12. But as economic recovery remained sluggish, he dipped into the transportation fund for $70 million in 2012-13 and $91 million this year. His new budget proposal takes only $18 million in 2014-15 and then, Malloy insists, the weaning process ends.

“Did we end all of that at once? The answer is no,” Malloy told “Where We Live” host John Dankosky. “Will we end it by next year? The answer is yes. So am I 100 percent pure? Well, I am pure in my intentions because we’re getting to that target … on a declining basis, to zero next year. That is the reality.”

In an effort to speed up transportation projects, Malloy’s new budget also seeks funds for 100 new engineers and other professionals for the Department of Transportation.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

Leave a comment