Five months into 2011, a glimmer of hope for progressive tax policy and a balanced, sensible approach to state budget woes has emerged in Connecticut. Lawmakers in all but a handful of states are continuing to grapple with historic budget shortfalls as they craft and finalize their budget plans for next year. State revenues continue to lag, many of the temporary tax increases put in place in 2009 are set to expire, and federal stimulus assistance is no longer available, yet the need for quality education, safe communities, affordable health care, public transit and well-maintained roads has not diminished.
Despite these fiscal realities, most state leaders have chosen to pursue a cuts only approach. Not only have they proposed reducing state spending to historically low and damaging levels, many states are also considering (or have enacted) harmful cuts in corporate, personal income, and property taxes further limiting resources available to adequately fund state and local government services next year and for years to come.
Connecticut Governor Dan Malloy and other state leaders bucked the anti-tax, anti-government, and deep spending and tax cut trend rampant in most states. Instead, they enacted a budget plan that not only raises substantial new revenue, but does so in a progressive and reform-minded manner. Connecticut’s budget for the next two fiscal years combines a variety of tax increases with reductions in state spending and some union concessions still to be determined. This brief will describe the major components and attributes of the tax package passed by Connecticut lawmakers.