In order to adjust the 2017 budget, lawmakers first have to adopt new revenue figures. But what is generally a simple exercise was more complicated Wednesday by the state’s new economic reality, lack of sleep, and emotions.
The largest contributor the state’s decline in revenues was the loss of income from its top 50 taxpayers. Legislative analysts told lawmakers that the top 50 Connecticut taxpayers made $2.9 billion less between 2014 and 2015. That drop in income caused the state to lose $217 million in revenue.
Sen. John Fonfara, D-Hartford, said that’s not because those taxpayers are leaving the state. He said they simply lost income over the past few years. That income, according to Fonfara, was mostly tied to the performance of the stock market.
Republican lawmakers have argued that it’s not the stock market that’s driving income revenues down, it’s moving vans. However, Fonfara said that’s not true.
“It’s the same top 50 taxpayers,” Fonfara said.
He said the Department of Revenue Services was able to share the unidentified information with them without violating the privacy of those taxpayers.
Rep. Chris Davis, R-East Windsor, wanted to know if the $17.88 billion estimated for collection in 2017 is the most revenue the state has ever planned on collecting. Legislative analysts confirmed that to be accurate.
Davis said over the past year they’ve seen decreases in revenue over almost every category of taxes and he anticipates these projections will have to be modified.
“These numbers may only reflect a snapshot in time . . . and possibly decrease in the future going forward,” Davis said.
The revenue projections the committee adopted Wednesday assume there will be an increase of $4.5 million in Lottery sales, $5 million more in tax collections, $8 million in cigarette tax revenues, and $40 million in legal settlements from the Attorney General’s office.
The revenue figures adopted by the committee also move $50 million from sales tax revenue — scheduled to go into the special transportation fund — to the general fund. Another $50 million in sales tax revenue scheduled to go into the Municipal Revenue Sharing Account, which was created last year to help lower municipal property taxes, will go to the general fund.
The budget also will sweep into the General Fund about $55 million in special accounts set up to fund various initiatives, such as the Regional Greenhouse Gas Initiative and the Biomedical Research Trust Fund.
Republican lawmakers on the committee were struggling to understand the numbers they had been given just moments before the meeting started at 11 a.m.
“No one in the room, besides OFA [Office of Fiscal Analysis], really knows the policy behind these numbers,” Rep. Vincent Candelora, R-North Branford, said.
He said the General Assembly is going to be asked to vote on a budget hours before the midnight adjournment without understanding what’s in the budget.
“We really don’t have clue what these numbers represent,” Candelora said.
He went on to say, “I’m not going to be complicit [in committing] a crime on Connecticut with these revenue numbers.” Then he stormed out of the hearing room and left before the vote.
His colleague, Rep. John Shaban, R-Redding, said personal income taxes are down, corporate income taxes are down, but the cigarette tax is up and the alcoholic beverage taxes are up.
“We see the health of our state and its citizens moving in the wrong direction,” Shaban said. However, “people are drinking, smoking and gambling so it’s not as bad. I think that’s regrettable.”
It’s unclear if Republican lawmakers will filibuster a budget until midnight. As of 1:55 p.m. neither the House or the Senate had convened to open debate on any bills.