Editorial: The Balanced Budget
You may have missed it or not had the chance to really focus on it because of the recent elections, but the state budget is passed and fully enacted. The bi-partisan budget passed with veto-proof majorities in the Senate and the House.
Balanced without raising taxes. Well, they did raise the tax on cigarettes, 45-cents per pack! We cannot argue with that one. They also put in place a 25-cent surcharge on ridesharing services. Now, if you take Uber to pick up your cigarettes, you may feel like you are being targeted, but the few taxes that did go up seem reasonable and sensible to us.
For Greenwich, there is good news in this budget: the estate tax and structural changes to the way our state operates. The estate tax, affectionately known as the “Death Tax,” can be pointed to as a major reason why so many people have moved from Connecticut to states, like Florida, that have a more favorable inheritance tax structure. While some do not like to admit it, that exodus has compounded our state’s financial malaise and caused the just-announced deficit. It is small, but it needs to be dealt with.
The estate tax, which had taxed all estates worth $2 million or more, will be raised over several years to meet federal standards. That means only estates over $5.49 million will be taxed. This is great news. As someone told us this week, “This gives me time to see if Connecticut can fix itself.”
This should put a pause button on folks currently considering moving six months and a day to another state. Stay here. For a little longer. Keep your estate in Connecticut and help be a part of the revival of our state. We need your dollars working here to fire up our economy, support our non-profits and invest in our state. Now, if we can just get rid of that pesky gift tax…
Equally, if not more importantly, are the structural changes the new budget has addressed about how our state operates. For the first time ever, a hard spending cap has been put in place. You may think we already had one. After all, we voted for one 25 years ago. It was never fully enacted. Now we have one, and state employee and teacher pensions, which have been hidden in other buckets over the years, will be under the spending cap.
We also now have a cap on state bonding. Over the past few years, our bonding, or borrowing, has increased at an alarming rate and, along with it, debt service payments. This has led rating agencies like Moody’s and others to downgrade our rating, which in turn makes it more expensive to sell the bonds or borrow the money. It’s a vicious cycle, but now with a bond cap and spending cap we can begin to put an end to “kicking the can down the road.”
Perhaps, for us, the most welcome structural change is that now all union contracts must be approved by both the Senate and the House. And, they are valid for only four years, meaning they must be renegotiated every four years. No longer can a Governor negotiate a contract that guarantees certain payouts over extended periods of time in order to gain political favor with a union’s members.
The best news to come out of the budget agreement? We got New Lebanon School. The State fulfilled its obligation to fund 80% of the school’s construction costs. This is great for our town and for the kids attending New Lebanon, now and in the future. Our faith in our state delegation was not misplaced on this issue. They fought very hard to make sure the Governor could not extract political revenge at the expense of our students.
In fact, the success of this entire bi-partisan budget would not have been possible without the tireless efforts of Senator Frantz and Representatives Floren, Camillo and Bocchino. Each brings knowledge, expertise and leadership to Hartford. They work seamlessly together to fight for what is right and best for all of Greenwich. Thank you for your hard work.