House Speaker Brendan Sharkey (D-Hamden) took a lot of flak this legislative session for some of his ideas to reform Connecticut’s broken tax system.
His plan to subject nonprofit hospitals and colleges to property taxes, for example, drew fierce opposition from the state’s health and higher education communities. A scaled down proposal that would only subject college’s off-campus expansions to local property taxes actually passed the House but died quietly in the Senate.
Sharkey also pitched capping property taxes and shifting more municipal expenses onto the state’s back. That idea gained almost no traction this year.
Realistically, neither of those proposals was going to draw support in an election-year, particularly in a state used to doing things the “old way,” even if it doesn’t make economic sense. We’re not endorsing Sharkey’s tax reform ideas. Much more study and analysis must be done to chart a path forward, but we applaud Sharkey’s leadership in moving the conversation forward.
Connecticut’s tax system is broken in a variety of ways. However, any conversation about tax reforms must not simply look at different ways of collecting revenues. One key issue is that Connecticut residents and businesses simply pay too much in taxes, creating an anti-competitive environment for attracting new jobs and industries. That’s why the state’s primary economic development strategy is giving low-interest loans or tax breaks and credits to businesses willing to add or relocate jobs here. Organic business growth is much harder to come by in the Land of Steady Habits. High energy and healthcare costs also contribute to Connecticut’s job creation woes.
Meaningful tax reform must take into consideration state spending, which has ballooned over the last three decades (from about $8 billion in 1990 to about $24 billion this year), despite stagnant population growth. That means the same number of people are paying for government services whose costs have tripled in the last 30 years. That is a long-term recipe for disaster.
If state spending isn’t reined in, tax reforms will be undermined. We’ll simply be trading in one bucket of revenue for another, leaving businesses and residents ultimately paying the same bill. That is one of the dangers of capping property tax increases and shifting more municipal costs to the state. How would the legislature cope with the added funding burden? Would it mean another state income tax increase, further discouraging residents from living in Connecticut and saddling small businesses with higher costs? Would higher income taxes and lower property taxes equate to a better business environment?
Sharkey said he wants 2015 to be the year when tax reform becomes a reality and not just a talking point. The business community needs a seat at the negotiating table because the state’s economic competitiveness hangs in the balance.
Marathon sponsorship lives on
Kudos to Northeast Utilities for stepping up and putting its name on and financial support behind the Hartford Marathon. Last week the utility said it will take over as title sponsor of the full and half marathons for the next three years, fortifying an important event for the Capital City, which created $14.1 million in economic value last year.
NU’s sponsorship makes sense. The utility has faced some bad publicity in recent years following its poor response to severe storms and controversial merger with Boston-based NStar. Getting the NU name attached to a positive event that draws 15,000 runners and tens of thousands of volunteers and spectators to downtown should create positive brand awareness and solidify the utility’s commitment to the region and state.
