Plan to revitalize CT runs into doubters of all persuasions

A much-anticipated report on stabilizing state finances and jump-starting Connecticut’s economy isn’t likely to get far before legislators adjourn in early May to run for re-election.

That’s according to leaders of the legislative panel with jurisdiction over most of the Commission on Fiscal Stability and Economic Growth’s recommendations.

“I presume there will be problems” among many Democrats with certain panel recommendations, Rep. Jason Rojas, D-East Hartford, House chair of the Finance, Revenue and Bonding Committee, said Friday.

“I would venture to say 100 percent of the Senate Republican Caucus would have a problem” with at least one key commission tax proposal, said Sen. L. Scott Frantz of Greenwich, the Senate GOP chair of the finance committee.

Those comments came one day after the sustainability panel issued a sweeping plan that included a dramatic shift in state tax burdens from wealthy income-taxpayers onto businesses and consumers.

The plan also includes:

• A $15 per hour state minimum wage.
• An end to collective bargaining for state employee benefits after the current contract expires in 2027.
• Electronic tolling and a gasoline tax hike to fund a major transportation rebuild.
• A new regional sales tax surcharge option to fund promote cooperation between municipalities and ease burdens on property tax bases.
• Development of a new college campus with a focus on science and engineering in a major Connecticut city.
• And $1 billion in unidentified reductions to the annual state budget, which currently stands at roughly $20 billion.

Leaders of the House and Senate caucuses from both parties, as well as Gov. Dannel P. Malloy, all issued similar statements Thursday, thanking the panel for a thorough blueprint, and pledging to analyze it closely.

Privately, though, rank-and-file lawmakers quickly expressed fears that the challenges posed in the report were too daunting to tackle quickly.

Rojas and Frantz — who were equally complimentary of the commission’s diligence — nonetheless conceded key pillars of the plan probably can’t win support before the regular 2018 General Assembly session ends on May 9.

Many Democrats would find it difficult to ask consumers to pay an extra $1 billion in sales taxes, or to cancel $750 million in existing tax credits and exemptions, to enable an income tax cut that would benefit wealthy households the most, Rojas said.

“It’s a heavy lift, without a doubt,” he said, adding that a $1 billion cut to a state budget already strapped by surging retirement benefit and other debt costs could result in reduced municipal aid — and ultimately higher property taxes. “That’s just not realistic.”

Similarly, Frantz said the commission’s call for $475 million in tax hikes on corporations, along with electronic tolls and a higher fuel levy, would be problematic for many in the GOP.

Could these proposals pass with two months left, especially with most legislators seeking re-election this year?

“I honestly don’t think so,” he said.

The sustainability commission faced the unenviable task of charting a course for Connecticut as it heads into a period of deep fiscal crisis, and members said it would be impossible to produce a report not filled with painful choices.

State government has amassed nearly $80 billion in long-term obligations between its bonded debt and its poorly funded retirement benefit programs. At the same time, its economic recovery since the last recession ended almost nine years ago has lagged the nation, and modest growth — at best — is projected for the foreseeable future.

Further complicating matters, key segments of the parties’ respective political bases quickly expressed concerns.

Labor leaders decried the proposed tax shift, as well as taking state employee fringe benefits out of the collective bargaining arena.

And the Connecticut Business and Industry Association and other business groups balked at the proposed corporation tax hike.

Despite the unlikelihood of action this spring, Rojas and Frantz insisted that the sustainability panel’s report will not sit on a shelf. It probably will be discussed not only over the next two months, but on the campaign trail this fall and throughout the 2019 legislative session.

“There is a lot of good work here,” Frantz said. “This is a report we can discuss for months and years to come. We may cherry-pick some items here and there.”

“I think we’re going to look at it in its totality,” Rojas said.

But the leaders of the sustainability panel urged legislators Thursday to embrace the full report — not select recommendations — and to do so without delay.

“The problems that the state has are our problems, and we have to get back to the table and help solve them,” said commission Co-chair Robert Patricelli of Simsbury, a retired health-care entrepreneur, who said all segments of Connecticut must play a role in solving this crisis. “The biggest enemy we face is the tendency to do nothing. But this ship … is literally burning.”

“The commission’s recommendations can change the course of Connecticut’s future,” said Webster Bank chairman and former CEO Jim Smith, the commission’s other co-chair, who added the panel’s recommendations work “only if taken together.”