CT’s wealth inequality remains a looming obstacle to tolling cars
While Gov. Ned Lamont’s plan to toll passenger cars bogged down this year due to multiple obstacles, one hurdle that generated no banner headlines — yet was just as daunting — centered on Connecticut’s poor.
More specifically, Lamont — a wealthy Greenwich businessman — and progressive fellow Democrats disagree about the fairness of Connecticut’s tax system.
The governor and his fellow Democrats are crafting a plan now centered on tolling only trucks, acknowledging that charging fees on cars was a political nightmare.
But that doesn’t mean every legislator wary of tolls faced the same dilemma. And those in urban centers, and in rural poor eastern Connecticut, said they would have been forced to ask some constituents to contribute more than they could afford.
Even the scaled-back tolling proposal Lamont offered earlier this fall would have asked many households to pay $400 to $800 annually in toll charges to help rebuild the state’s aging, overcrowded transportation system.
But critics noted that would effectively wipe out one of Connecticut’s most effective anti-poverty programs, the state Earned Income Tax Credit — an initiative that already has taken several hits in its first decade of existence.
And while officials did increase the state’s minimum wage, tolling passenger cars would have followed an array of smaller tax and fee increases lawmakers dumped on low-to-middle income families last spring — in part to accommodate Lamont’s push not to raise income tax rates on the wealthy.
“Often we don’t develop policy holistically and look at everything in its totality,” said Rep. Jason Rojas, D-East Hartford, co-chairman of the tax-writing Finance, Revenue and Bonding Committee.
Rojas, whose committee had endorsed a tax surcharge on investment earnings for households with overall incomes above $500,000 per year, said Connecticut still relies too heavily on municipal property taxes and other levies that are highly regressive in nature. “That’s the unfortunate reality of our overall tax system,” he said.
“It would be insane not to talk about a sliding scale system” for tolls, said Rep. Toni E. Walker, D-New Haven, longtime co-chairwoman of the Appropriations Committee.
Legislators passed a law gradually raising the minimum wage from $10.10 per hour to $15 by late 2023 — it reached $11 in October — and made other investments in job training and development to combat the extreme wealth inequality in Connecticut, Walker said.
“We’re talking about trying to expand and improve the workforce,” she said, adding that while the state needs to invest in transportation, paying highway tolls would be harder on poor and middle class drivers than wealthy ones.
The last plan Lamont offered included rates for cars ranging from 40 to 80 cents per gantry, provided the driver had purchased a Connecticut E-Z Pass. Toll gantries would be placed near highway bridges most in need of repairs, and toll rates would vary based upon the cost of upgrades each bridge would need.
The governor also had stipulated that no driver would pay twice per day for passing the same gantry.
Still, a vehicle crossing one gantry on the way to work, and a second gantry on the way home, would pay between 80 cents and $1.60 per day.
That’s $4 to $8 per week, and just over $200 to $400 per year.
If a family has two adults driving separate cars to work — each crossing one gantry each way — the bill doubles again, falling between $400 and $800 per year.
The 2011 legislature and then-Gov. Dannel P. Malloy created the state’s Earned Income Tax Credit, originally equal to 30% of the federal EITC, to help poor working families save more. Since then it has been whittled down to 23% of the federal benefit.
The EITC is a refundable tax credit, meaning filers can claim the credit as long as they are working, even if they make so little they owe no state income taxes.
But because of the high cost of living in Connecticut, advocates say the program really isn’t about helping poor families save money. Instead, it simply helps them catch up on bills that have become overwhelming.
The state EITC returned $118.3 million to an estimated 194,000 working poor people this year, according to nonpartisan analysts. That’s an average refund of $610 per household.
Supporters of the program say the refunds typically are spent paying off winter heating bills, buying groceries or making overdue car repairs.
The Connecticut Association for Human Services, one of the leading advocates for the EITC, has not analyzed the potential impact of tolls on the working poor.
But “it certainly would be very harmful to low-income families,” said the association’s executive director, Robert Blakely, who added that for people receiving the EITC, a $400-to-$800 tolling bill could be a real challenge. “It’s about buying shoes and making those necessary car repairs.”
A household with one adult and one child could not earn more than $40,320 last year and qualify for the EITC, according to the Department of Revenue Services. A married couple with one child could not make more than $46,010.
Connecticut Voices for Children, a New Haven-based policy research group, is planning its next annual state budget forum — set for Jan. 15 — around issues of income and wealth inequality.
Emily Byrne, executive director of Connecticut Voices, said her group also has not done a specific analysis of tolling proposals. But Byrne said, “we certainly would encourage any tolling plan to look at the unintended consequences to low- and middle-income families. It’s about making sure everyday living is not becoming more expensive.”
Several of the proposed toll gantries — not surprisingly — were focused on heavily populated and heavily traveled areas, urban centers where poverty is a major issue.
Rep. Brandon McGee, D-Hartford, chairman of the Black and Puerto Rican Caucus, applauded the Lamont administration for its willingness to engage with legislators throughout the tolls debate.
Lamont said the revised tolls plan he offered in November featured lower rates than likely would have been posted for the more comprehensive tolling initiative he recommended in February.
The governor also said he was willing to discuss options for helping poor households recoup toll costs — perhaps through tax credits — provided legislators have a plan to pay for it. The General Fund for the current fiscal year is projected to face a very modest shortfall of $19.6 million on June 30, a gap equal to 1/10th of 1%.
“As long as the numbers add up, I’m willing to talk about it,” he said.
But poverty isn’t just limited to Connecticut’s largest cities.
Windham County, in the state’s northeastern corner, is home to some of the lowest incomes and the highest unemployment rates. And Lamont’s revised plan included a toll gantry on Interstate 395 in the Moosup section of Plainfield.
Sen. Mae Flexer, D-Windham, said the passage of a $15-per-hour minimum wage was crucial for her district, and she was concerned that tolling passenger cars could undermine that effort.
“That’s a tough concern for me,” she said. “One of my number one priorities has been issues that impact the people who live paycheck to paycheck. It’s something we don’t focus on enough. Every time we get a little bit ahead at helping people who are living on the margins, we seem to go in the opposite direction.”
Some legislators said that happened this past spring as Lamont pressed his fellow Democrats to kill the proposed income tax surcharge on wealthy households’ investment earnings. This was projected to raise $264 million per year and was a key part of the finance committee’s plan to close a major projected hole in the budget.
And while the surcharge was eventually scrapped, some legislators noted there were several tax hikes that remained — aimed more at low- and middle-income households.
• A 1% sales tax surcharge on restaurant food and other prepared meals.
• Small increases on the alcoholic beverages tax and the Rideshare transit fee.
• And a new 10-cent charge on plastic bags.
In addition, a previously approved income tax cut for college graduates with student loan debt was repealed before they could take effect.
And Lamont deferred one of his main campaign promises — expanding the largest income tax credit, one that helps low- and middle-income families cover local property taxes.
Taxpayers without children lost access to that credit, which provides up to $200 per filer with relief.
Lamont pledged last fall to restore eligibility to that group, and the $53 million in cumulative annual relief it lost, in the second year of his first two-year budget. But eligibility was not restored.
House Majority Leader Matt Ritter, D-Hartford, acknowledged the difficult challenge some of his colleagues from Connecticut’s poorest communities faced when considering earlier proposals to toll cars.
Ritter didn’t speculate on whether that would have prevented a tolling initiative involving cars from passing in the House, but he did say it had begun to weigh on some members of his caucus.
“I think the last few months has made me think that we may have lost a few people,” he said.
Keith M. Phaneuf is a reporter for The Connecticut Mirror (www.ctmirror.org). Copyright 2019 © The Connecticut Mirror.
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