Since the national economy took a turn for the worse five years ago, those who believe Connecticut has a revenue problem rather than a spending problem have searched high and low for a solution.
During the recession of the early 1990s, the last time the state faced a fiscal crisis of comparable magnitude, there was a vast potential source of untapped revenue. Surprisingly, at that time Connecticut had no personal income tax. So at the urging of born-again income-tax advocate Gov. Lowell Weicker, the General Assembly narrowly passed it, prompting 40,000 taxpayers to march on the Capitol. The demonstrators cursed at Weicker and tried to spit on him. They threatened to unseat lawmakers who voted for what, at the time, was the largest tax increase in state history.
As liberals had predicted, the tax base stabilized and lots of revenue was created to pay the wages and benefits of public employees and the political class. But as conservatives also prophesied, the massive tax hike did little or nothing for the economy. Since the tax on personal income was rammed through the legislature and signed by Weicker, Connecticut has essentially become a zero-growth state. The number of jobs in Connecticut is basically the same as it was in 1990, but annual state spending has increased from $7 billion to about $20 billion today — way beyond the rate of inflation and astronomically higher than our rate of growth.
So, if we want to continue to expand the government, what do we do in the absence of economic growth? Well, if a pair of UConn economists have their way, we’ll consider a statewide property tax. Given our experience of the last 23 years, it is more than remarkable that, in releasing the report last week, UConn contributing economist Stan McMillen called the concept of a statewide property tax an example of thinking “outside the box.”
McMillen and another UConn economist, Steven P. Lanza, say we should look into the broad-based property tax as a way of increasing the state’s educational cost sharing (ECS) grants to municipalities. The economic duo say that, despite state mandates requiring adequate funding, the ECS program has been underfunded to the tune of $1.05 billion over the last five years.
If indeed the state is failing to meet its statutory obligation to fund school districts — something on which officials do not seem to agree — then something needs to be done. But do we really want to provide the General Assembly with yet another means of reaching into our wallets? Once enacted, taxes rarely disappear. Republican gubernatorial candidate John Rowland campaigned in 1994, in part, on the repeal of Weicker’s income tax. But once elected, he abandoned the idea when faced with the reality that almost no one in Hartford wanted to give up the treasure trove of new revenue.
Rather than increasing the sales or income taxes, Lanza said a property tax would be a more predictable source of revenue. “Property can’t get up and move so easily. So you know the tax base is going to stay there and you can be pretty certain about the revenue that you’re going to raise,” Lanza surmised. In other words, lawmakers have a captive audience.
But that’s precisely what income tax advocates were saying 23 years ago and yet, what did it get us? Another epic tax increase in 2011, nagging deficits, perpetual budget gimmicks and underfunded pensions as far as the eye can see. If we take on any more “stability,” it will kill us.
Implicit in the comments of Lanza and McMillen is that inadequate ECS funding is at the root of Connecticut’s worst-in-the-nation achievement gap between wealthy and poor school districts. But a review of fiscal 2014 ECS estimates reveals that poorer districts receive far more in per-capita aid than wealthy ones. Low-performing Hartford, for example, receives by far the highest amount — almost $200 million in ECS grants — and, according to the Yankee Institute, has spent the most per-capita in the state over the last 13 years.
And it’s not just poor cities receiving more than well-to-do suburbs. In the rural Northwest Corner, for example, toney Salisbury will receive only $187,266 in ECS grants while, with a population 20 percent lower than Salisbury’s, working-class North Canaan will collect more than $2 million.
So, is miserly school spending really the culprit in low student achievement? Looking at the evidence, you’d have to say no. More likely, it’s a combination of factors over which schools have little control. Poverty, children whose fathers have abandoned them, mothers who are overwhelmed or doomed to a life of dependency, and kids who spend all their spare time doing drugs or staring at screens.
In other words, social pathologies that no ECS grant of any amount will cure.