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Praise for budget on which to build Connecticut's economy

There is much to like about the two-year, $46.4 billion budget approved by the state General Assembly and which Gov. Ned Lamont was preparing to sign when this editorial went to press last week.

In avoiding any major tax increases, it lines up with what we set as an editorial priority heading into the 2021 session.

Hammering the richest Connecticut residents with higher tax rates, or with new ways of taxation — as proposed by lawmakers in the progressive wing of the party — might be a feel-good measure. Arguably, it would be fair, with the money directed to key societal needs and helping address inequities in our have and have-not state.

But Lamont recognized, as did we, that it could have well proven counterproductive if even a couple of billionaires were persuaded to move their primary residences elsewhere and take their Connecticut tax paying with them. And how could tax increases be justified when unprecedented federal aid is pouring into the state to help the pandemic recovery and when the state has a record budget reserve? They couldn't.

Though negotiated between the Democratic governor and the Democratic majorities in the House and Senate, the spending plan won bipartisan support, approved 116-31 in the House and 31-4 in the Senate, with substantial support from Republicans happy with its lack of tax increases and its business and municipal friendly elements.

A shout out to Sen. Cathy Osten, D-Sprague, whose 19th District includes the towns of Ledyard, Montville, Norwich and Lisbon, and who was in the thick of it as co-chair of the Appropriations Committee. Osten fought to make sure the legislature did not miss its opportunity to make a big investment in the underfunded teacher and state-worker pension funds. The more than $1 billion to be deposited will mean long-term savings.

Osten, situated on the no-tax-increase side of the debate, also effectively advocated from her strong budgetary position to make sure the nonprofit human services agencies that serve some of Connecticut's most vulnerable residents will see funding increases; that distressed school systems will receive needed state aid; and that funding for cities and towns will get a boost, which helps local property taxpayers.

A note, also, about Sen. Paul Formica, R-East Lyme, who crossed the aisle to support the budget. In 2017, when Formica shared leadership power with Osten on Appropriations in an 18-18 divided Senate, structural changes were approved that imposed fiscal discipline — including a Volatility Cap and a workable Spending Cap — which are now paying dividends with improved fiscal stability.

In this budget there are reforms in unemployment benefits that will save businesses money. An enhanced Earned Income Tax Credit that will put more money in the pockets of about 200,000 low-income worker households. And there is increased support for workforce development and $15 million to promote tourism and help that industry recover.

It is a budget that should help, not hinder, an economic recovery, which would not have been the case with a tax-heavy budget.

If looking for red flags, the reliance on $1.75 billion in federal pandemic relief aid to balance the budget and support its increases of 2.6% and 3.9% over the next two years, is waving the brightest. That level of federal support won’t be there after the 2022 election when the legislature next prepares to meet to enact its two-year budgetary plans.

But we still feel the investment now is a wise one, as is the tax avoidance. The record $3 billion (and still growing) rainy day fund was preserved and should mitigate against future budget shortfalls. And if the economy grows as hoped, that will grow tax revenues as well.

All in all, after a decade of fiscal struggles, this is a budget to feel pretty good about. The next challenge is to get liftoff on the economy.

 

 

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Erica Moser and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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