HARTFORD, CT — Providers of mostly health services came to the Legislative Office Building Tuesday to implore lawmakers to avoid austerity by broadening the sales tax base.
The providers, who attended Tuesday’s press conference, believe broadening the sales tax base is the only viable way to maintain their services. It’s a message they wanted to deliver before Democratic and Republican legislative leaders and Gov. Dannel P. Malloy meet Wednesday to discuss their two-year budget proposals.
Democratic legislators in the House and Senate are expected to meet separately Thursday to discuss their budget proposals. The Democratic Party still holds a small 79-72 majority over Republicans in the House. The parties are evenly split in the state Senate.
Democratic legislative leaders have refused to take any tax hikes off the table, but Malloy, who is also a Democrat, has maintained his desire to limit the revenue proposals while focusing on spending cuts.
Malloy’s revised budget closes a $2.3 billion hole in 2018 and a $2.9 billion hole in 2019 with spending cuts, a state employee concession package, and a few revenue increases along with the elimination of some tax exemptions and credits. It also asks cities and towns to contribute $400 million to the cost of the teacher’s pension fund and eliminates the Pequot and Mohegan Fund, which are the funds redistributed to towns from the slot revenues the state receives from the two federally recognized tribes. In addition it sets forth a new distribution of education funds.
The $1.5 billion drop in revenue in April means the state can only support as many grants and programs as “our available resources allow,” Malloy has said.
That’s why healthcare providers who attended Tuesday’s press conference would like to see the state broaden the sales tax base by taxing some services for the first-time.
Derek Thomas, a fiscal policy analyst with Connecticut Voices for Children, said the sales tax system should be modernized to reflect an economy that consumes more services than goods.
Services that aren’t currently taxed include bowling alleys, coin-operated video games, architectural services, health club services, land surveying, fur and clothing storage, interior design, and computer and data processing services. If the state was able to tax these things and a dozen or so others it could bring in an additional $1.34 billion in revenue.
“Everybody chips in on this proposal,” Thomas said.
He said people consume services even during a recession so it reduces the volatility of the tax system.
However, plans to radically modify the sales tax system was not part of any lawmaker’s budget proposal.
But that didn’t deter advocates from offering it as a solution Tuesday.
“I think a lot of people recognize this needs to be done,” Thomas said.
He said he understands it opens up the floodgates for opposition to these new taxes from a variety of industries, but it’s necessary to avoid the painful cuts that will result from much smaller revenue proposals.
“Now is the time to do that,” Thomas said.
Rep. Peter Tercyak, D-New Britain, who helped secure the room for Tuesday’s press conference, said regular people would be willing to pay a little bit more to make sure these services are maintained.
Tercyak said the only thing he heard at a church bazaar this weekend more than people telling him they would be willing to pay more was, “c’mon tax the rich.”
He said the problem isn’t with “regular people.” It’s with lawmakers. And he’s not convinced he’s going to be able to convince his colleagues to endorse a more modern sales tax system in the next few days. He said it’s up to regular people to call their legislators and let them know they support the idea because it would save the services.
“It’s not like if people vote against this they’ll be running toward the Republican budget,” Tercyak said.
Republicans have proposed a budget in which they ask state employees to contribute more by reducing their ability to bargain over certain provisions of their health and pension benefits.
Currently, Malloy is the only one who can negotiate with the unions over those benefits. He said he’s not going to go back and ask for more after they reached a framework for a tentative deal. The rank-and-file union members will be voting on the concession package in mid-July.
Alice Forrester, CEO of the Clifford Beers Clinic, said if the General Assembly doesn’t approve a budget by June 30 then they will operate as they currently are for about six to eight weeks.
Beyond that, if the state doesn’t provide funding, “this is going to be an enormous burden on your health care system,” Forrester said.
“If you’re seeking mental health services you’re not going to be able to find them,” Forrester said.
Maria Skinner, executive director of the McCall Center for Behavioral Health in Torrington, said resources for those with addiction are going to be very hard to come by if the state doesn’t adopt a budget by June 30.
“I shudder to think what will happen,” Skinner said.
Like Forrester, she said her organization has about six to eight weeks to operate before depleting their reserves.
“That terrifies me,” Skinner said.
As a community nonprofit providers, Skinner and Forrester operate organizations that are not considered essential state government services, so it will be up to Malloy to decide whether to continue those contracts.
In the past the state has reduced payments to community nonprofit providers when there is no budget in place.
Malloy has said he would outline how he would define essential services at Wednesday’s budget meeting.