Many eyes on CT budget, which must address inequalities
Connecticut legislators will look through a different lens Wednesday when Gov. Ned Lamont proposes the next state budget.
For the first time in state history, the governor must demonstrate what that plan will do to address longstanding inequalities in education, health care, housing and economic opportunity — particularly along racial and economic lines.
Legislators ordered this change last spring, but they won’t be the only ones watching closely.
“The state of Connecticut today is home to the most extreme racial, economic and gender inequities in the country,” said Puya Gerami, campaign manager for the Recovery for All CT coalition.
But Gerami, whose coalition includes more than 60 faith-based, labor and community organizations representing half a million people, quickly added that state officials now possess “a powerful tool” to enact change and will be expected to take immediate advantage of it.
“No longer will elected officials get away with paying lip service to equity,” he added.
The United Way of Connecticut, which projects the basic, “survival budget” here for a family of four exceeds $90,000 per year, also is watching closely for Lamont’s assessment of inequality.
“Even before the pandemic, 38% of CT residents were living paycheck-to-paycheck or falling behind,” said Lisa Tepper Bates, president and CEO of the Connecticut chapter.
And while basic needs and child care costs here have risen 18% and 35%, respectively, over the past two years, Bates added, “Wages have risen but have not kept up with this inflation — not even close. This economic stress hits families with children particularly hard and families of color hardest.”
But even as Connecticut families have struggled, state government’s coffers have swelled.
Since 2018, the state has amassed a $3.3 billion rainy day fund and used another $5.8 billion in budget surpluses to whittle down pension debt.
Connecticut wrapped the 2021-22 fiscal year last summer with a $4.3 billion surplus — a one-year cushion equal to roughly one-fifth of the entire General Fund — even as the national inflation rate eclipsed 9%, a 40-year-high.
Lamont and legislators approved a $600 million-plus state tax relief plan last summer. And while that was dominated by one-shot tax breaks, the governor has put close to $550 million in recurring annual relief on the table in the past two weeks, topped by state income tax rate cuts aimed chiefly at the middle class.
More than tax relief
But while these and many other tax-cutting ideas are plentiful at the Capitol, many groups say Connecticut needs far more than just tax relief.
Connecticut Voices for Children, a New Haven-based policy group, has challenged state officials not only to shift some tax burdens off the poor and middle class and onto the state’s wealthiest households but to increase funding for education, early childhood development, social services and health care.
Connecticut Voices has warned for years that spending in key areas tied to children has represented smaller and smaller portions of the budget for years as decades of rising debt costs dominated spending. The think-tank’s executive director, Emily Byrne, said it’s important not only to see growth in the children’s share of the budget but to conduct more analyses showing how much is targeted to low- and moderate-income households.
“The new equity law allows us to better understand how the choice points in the Governor’s budget were determined and highlights where the legislature needs to take a closer look,” Byrne said, adding that funding for more public agency staffing also is crucial.
The State Employees Bargaining Agent Coalition, which represents all major unions excluding state police, noted the workforce is down more than 20% over the past two decades — and this also must be acknowledged by the governor.
The head of the union representing state maintenance workers, cooks and other blue-collar staff called this a “staggering loss” to vital state programs — a situation that disproportionately harms communities of color.
“We cannot move towards a more equitable future without staffing the very mechanisms that lift our communities up,” said Carl Chisem, who also co-chairs SEBAC’s Racial Justice Committee. “We know this problem exists throughout the public sector, especially in public schools and health care institutions.”
But unions and policy groups aren’t the only ones that will be watching closely Wednesday when Lamont delivers his proposals.
Legislators seeking changes too
Legislators who mandated this new approach to budgeting also have big expectations.
Rep. Toni E. Walker, D-New Haven, longtime co-chairwoman of the Appropriations Committee and a member of the Black and Puerto Rican Caucus, said state officials still don’t fully appreciate how severely the coronavirus pandemic took entrenched inequities in education, health care, affordable housing and unemployment and made them even more extreme, particularly for communities of color.
“The problem that we saw come out were issues many of us had been talking about, but they became much larger than what we expected,” she said. “We’ve got to be honest about it and work toward a better solution.”
Sen. John Fonfara, D-Hartford, who co-chairs the tax-writing Finance Committee, has been blocked by Lamont in recent years from boosting income taxes on the wealthy and on major corporations to fund greater state investments in Connecticut’s poorest communities.
Fonfara, one of the chief architects of the savings program that has helped the state amass billions of dollars in budget surpluses in recent years, tried last year to scale back that program modestly, to dedicate about $300 million annually to early childhood development.
A frustrated Fonfara two years ago likened impacts of the state budget on the Black community to the police killing of George Floyd by Minneapolis police, the May 2020 crime that set off a national debate over criminal and economic justice.
“Our policies are a knee on the neck of the Black community and other underserved communities of our state,” the Hartford lawmaker said then. “We can do better, and we must do better.”
Fonfara told the CT Mirror this week the new requirement to analyze state finances in terms of socio-economic fairness has the potential to reshape life dramatically — but only if officials are prepared to look at it without flinching.
For those who live in “concentrated poverty,” Fonfara said — referring to the federal standard for Census tracts in which 40% or more of the population lives below the Federal Poverty Level — “the opportunities you’re been given in life are diminished greatly compared to what the average person in Connecticut enjoys.”
Lamont’s budget chief: CT is better at helping those in need
Jeffrey Beckham, Lamont’s budget director, said the administration’s proposal for the next two fiscal years will feature several provisions to close gaps in equity.
Besides a broad-based state income cut — and targeted relief for the working poor and for small and mid-sized businesses — there will be significant new investments in early childhood care, school readiness and workforce development, Beckham said.
Funding will be recommended to continue a gradual increase in Education Cost Sharing grants for local school districts and more resources to respond to growing caseloads in services for the disabled and residents served by Medicaid.
But while Connecticut has some of the most extreme income and wealth inequality in the U.S., Beckham said the governor’s budget also will recognize that the state already is national leader in terms of many forms of assistance it offers for the most vulnerable.
“If you’re going to talk about that topic, let’s talk about what we’ve always done, what we’re proud we do,” he said.
That includes a state income tax that is particularly progressive toward low-earners. Most households making less than $40,000 per year have little or no state income tax liability, and the administration says that the governor’s new proposals would push that threshold to about $50,000.
Connecticut also has an $8 billion Medicaid program that serves a wider population than those in most other states, a municipal aid system that largely directs aid to fiscally distressed communities, and generous family assistance and nutrition programs, Beckham said.
“We’re are one of the better states on that score,” he added. “And we’ve been doing that for decades.”