As you might expect, the discussion at our recent CTNewsJunkie editorial board meeting with Gov. Malloy was dominated by the topic of education reform — a direct reflection, no doubt, of his top agenda item for the current legislative session.
Even so, some questioners, yours truly included, managed to pry the governor away from tenure and ECS formulas, to far more important subjects such as booze and tolls. Malloy chortled when, in changing the subject, I suggested his liquor sales reform proposal was “near-and-dear to my heart.”
Last week, I’d seen a report on Malloy’s proposal to overhaul the way alcoholic beverages are sold in the state, including allowing package stores to open on Sundays. Small package store owners are almost unanimous in their feeling that opening on the Sabbath will hurt them, but the governor was quoted as saying his broader proposal would actually create jobs. How could that be, I asked? Wouldn’t the presumed closing of small package stores result in consolidation and fewer jobs overall?
The governor pounced on the question, as if he’d been lying in wait for it. But essentially he said the job growth in the liquor industry would stem less from Sunday sales than it would from reforming the arcane system Connecticut has in place for regulating the sale of alcoholic beverages.
For some inexplicable reason (perhaps the protection of an erstwhile politically protected business?), the state has a minimum price that prohibits sale items and bulk discounts. In the days before our meeting, Malloy had visited two large liquor stores over the Massachusetts border. I’m still trying to picture Malloy’s and his state police escort pulling into the vast parking lot of Yankee Spirits in Sturbridge and the governor of Connecticut strolling the aisles looking for a good deal on a bottle of Merlot, but that’s neither here nor there.
“We found that 30-35 percent of the cars in that parking lot were Connecticut cars,” Malloy said. About 35 miles down the Mass Pike at Table & Vine in West Springfield, upwards of 20 percent of the cars in the lot were registered to Nutmeggers. Why? Well, it wasn’t a Sunday, so we can cross that explanation off the list.
Inside Yankee Spirits, a bottle of Beringer Knight’s Valley Cabernet was on sale for $14.98, not counting an additional 10 percent discount for buying by the case. To which Malloy opined: “The minimum legal price that you could buy that bottle of wine in Connecticut is $21.99. There is no way that’s not causing us to lose sales. And the idea of having minimum pricing is, quite frankly, outrageous.”
How much are we losing in sales? For what it’s worth, industry experts have estimated the state loses $570 million per year to neighboring states. The governor continued:
“You return $570 million of sales to the state of Connecticut — and that’s not Sunday sales, that’s everything — then you’re going to increase employment, you’re going to have more people delivering product more frequently, you’re going to have more people working in stores to meet the needs of purchasers. You could not bring back $570 million in sales to the state of Connecticut and not increase employment.”
As is the case with Red-Light cameras, I suspect the real motive is increased revenues — estimated at between $6.4 and $11.2 million for Sunday sales alone — rather than fairness to Connecticut’s 3.4 million consumers. But hey, as a wine drinker and as a steadfast opponent of crony capitalism, I’ll take what I can get.
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Now on to the driving portion of this column. Connecticut has the distinction of placing one of highest tax burdens on consumers of gasoline in the nation. We pay not only a 25 cents per gallon state tax, but also something called a gross receipts tax. It’s really a hidden tax of 7.3 percent per gallon paid by dealers at the wholesale level and passed on to consumers.
As you can imagine, lawmakers looking for more money love the hidden tax because practically no one even knows it exists and, unlike the fixed regular gas tax, the gross receipts tax balloons right along with the price at the pump. Not surprisingly, lawmakers such as Sen. Len Suzio, R-Meriden, have seized on the issue, demanding that the hidden tax be capped now that rising gas prices have brought in greater-than-expected revenues.
It’s estimated that the gross receipts tax will bring in $342 million this year alone, and possibly much more if gasoline prices continue their upward trajectory. But Malloy isn’t looking to reduce or reform the tax.
“I don’t support change at this time unless we go with a toll. People mention that we have one of the higher combination taxes on petroleum products and that’s absolutely true and we’re frequently compared to states that have substantially lower taxes. They all have tolls.”
Longtime state residents might recall a fiery tractor-trailer crash in 1983 that killed seven people at the Stratford toll plaza on the Connecticut Turnpike. That event, coupled with complicated formulas for federal highway funds the state received for the reconstruction of the collapsed Mianus River Bridge, put enormous pressure on Connecticut to abolish road tolls in 1985. At the time, the shuttering of the toll booths on I-95 cost the state $65 million a year in lost revenues.
At one point, I asked Malloy if he would go on record as supporting lower gasoline taxes in return for the reintroduction of tolls. His response:
“Sure, absolutely. I’ve made it very clear we’re not using gas tax revenue for general expenditures. We’re allocating it for transportation. Absolutely, I would support that if there was a groundswell for tolls, but there isn’t.”
Then Malloy showed just how on top of his game he is. Only about 90 minutes earlier (and unbeknownst to any of us on the editorial board), news had broken that federal officials had rejected Rhode Island’s plan to place toll booths on I-95 near the Connecticut line.
“It was a single location at the border, which had an interesting look to the federal government,” Malloy wryly observed, adding that the decision bodes ill for his state because a similar arrangement might be the only way Connecticut residents would embrace tolls on their own roads.
I understand that many of our bridges are in sorry shape and our roads are crumbling and we need money to fix them. But I’m with Suzio on this one, governor. Why should taxes on an essential item like gasoline rise sharply with the erratic whims of the world oil markets? Cap the gross receipts tax or set it at a fixed rate like the regular gas tax.
Then turn the lights out in the governor’s office and go home for a nice rest. You’re working much too hard.
Terry Cowgill blogs at ctdevilsadvocate.com, is the editor of ctessentialpolitics.com and was an award-winning editor and senior writer for The Lakeville Journal Company.
