🔒Bordonaro: Lamont must stand firm on resisting tax hikes

Newly released data from national real estate brokerage firm CBRE confirms what many in Connecticut have speculated over the past year: the Nutmeg State’s suburbs became a desirable destination for New York City residents in 2020 amid the coronavirus pandemic.

More than 27,000 people left New York City and its surrounding metro areas for Connecticut last year, according to CBRE’s recent analysis of change-of-address data from the U.S. Postal Service.

The surge in new residents could finally reverse a decade-long population attrition in the state. We’ve seen other benefits from this trend including a much healthier short-term state budget outlook. Comptroller Kevin Lembo recently projected the state’s current fiscal year, which ends June 30, could end with a $250 million surplus, which was higher than expected.

Stimulus funding has also buoyed Connecticut’s economy.

For too long Connecticut has been used to seeing poor economic news, but as we begin to reopen in earnest on May 19, I believe the state has a six- to 12-month window to solidify and leverage its recent population gains. That’s why it’s critical for Gov. Ned Lamont to maintain his opposition to any tax increases, including proposals by members of his own party to boost income taxes on high-end earners, among other revenue-raising efforts.

With the current budget in the black, a $3-billion-plus rainy day fund and billions of dollars in federal economic recovery stimulus money coming into the state, there is no justification for raising taxes. It would crimp our chances of leveraging the state’s relatively strong position coming out of the pandemic.

Let’s not forget we still have a looming pension crisis with the state carrying billions of dollars in unfunded liabilities.

And as much as we want to celebrate our recent gains, the reality is an increasing percentage of East Coast and West Coast wealth continues to migrate South, a trend not likely to slow anytime soon. Adding to that challenge are the Biden administration’s proposed federal tax increases, which will only further incentivize the wealthiest residents to reduce their state and local tax burdens.

According to a recent report by Hearst CT, if Biden’s proposed American Families Plan tax hikes become law, about 15,000 of Connecticut’s wealthiest taxpayers could pay nearly half their income in state and federal income taxes and more than half their profits on investments in combined capital gains taxes.

As a result, the allure of states with no income taxes like Texas and Florida will become even more powerful.

And for Connecticut to truly leverage its strengths right now we don’t just need new residents, but new businesses. We have challenges there as well.

Chief Executive magazine’s annual survey of U.S. CEOs recently ranked Connecticut No. 43 in the country in terms of best places to do business. (The bright side is we improved three spots from 2020, thanks largely to the state’s handling of the pandemic.)

Lawmakers shouldn’t only avoid tax increases but also focus on ways to strengthen Connecticut’s competitiveness.

For example, the state should use more of its federal stimulus money to offset the $800 million-plus it borrowed over the past year to pay unemployment benefits — money that must be repaid by employers.

And let’s really take a hard look at our regulatory framework. Over the last year Lamont through executive orders eased some regulatory restrictions on myriad industries, helping the state cope with the pandemic.

Were all those regulations necessary in the first place? Can some of those changes be made permanent? Where else can we make it easier to do business in this state? These are the questions policymakers should be asking themselves.

Over the coming months Connecticut has a rare opportunity to lead the Northeast economy out of the pandemic. Lawmakers’ focus in the last few weeks of the 2021 legislative session should be to ignite that effort, not hold it back.