Budget 090403 Fact Fiction

FACT and FICTION: The Appropriations and Finance Committee Proposals April 3, 2009

CUTTING THE SIZE OF BUREAUCRACY FICTION: Governor’s Rell’s office: “There’s no cut whatsoever ... No downsizing of any kind.” FICTION: Governor Rell: “They do absolutely nothing to address the bloat of state government.” •

FACT: We balanced a budget that is $52 M below the Governor in FY 10 and $112 M below the Governor in FY 11. Our budget is $1 B below current services in FY 10 and $1.4 B below current services in FY 11.

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FACT: Our budget has real cuts throughout most of the state agencies. o EXAMPLE: We have reduced managerial positions in DCF by 25% (66 positions total). This will encourage DCF to reinvent itself to eliminate some of the 5 layers of bureaucracy. Currently, from frontline social worker on up, there are five layers of reporting.

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FACT: We eliminated all funded vacant positions from the budget to stop “bureaucratic creep”, and put in strong standards for refilling those positions. Altogether, 468 vacant positions have been eliminated. This means that when we come out of the recession, agencies will not simply be able to fill those positions – they will have to justify their existence.

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FACT: We have cut DPH to reduce administrative overhead.

The administrative costs of most agencies are usually approximately 5-10% of the agency’s entire budget. DPH’s administrative costs were approximately 20% of their budget.

FACT: We required state agencies to reduce costs of contracts, equipment and leases.

Agencies were given

latitude to make those reductions – we did not micromanage. o For example, we have reduced operational funding and have instructed the DOC Commissioner to effectuate savings by reducing the number of non-violent offenders through re-entry furloughs, administrative parole, risk reduction credits, and other measures.

FACT: We are providing incentives for the regionalization of local health departments. • FACT: We are going to deliver better services more effectively at lower cost by integrating Medicaid and •

Medicare benefits. This is an estimated savings of $25M in FY 10, and $75M in FY 11. •

FACT: The Governor’s budget included approximately $750 million in “cuts” over the biennium that cannot be accomplished o $550 M = Cuts that would adversely impact federal stimulus funds o $185 M = Amount by which Governor overestimated ARRA funds to CT o $10 M = Estimated revenue from the Governor’s withdrawn proposal to extend hours of alcoholic beverage sales at casinos

TAX INCREASES FICTION: Media report, April 3rd: “The state’s richest residents — those earning more than $1 million annually — would see their income tax rates increase by nearly 60 percent under the plan…”

FACT: The income tax increases we instituted are “graduated” or “marginal” tax rates. This means that a taxpayer who earns over a million dollars would pay the highest rate (7.95%) only on the money he or she earns over $1 million. The rates for taxable income would be as follows: o First $20,000 of taxable income is taxed at 3% o Between $20,000 and $250,000 is taxed at 5% o Between $250,000 and $500,000 is taxed at 6% o Between $500,000 and $750,000 is taxed at 7% o Between $750,000 and $1,000,000 is taxed at 7.5% o Any money earned over $1,000,000 is taxed at 7.95% State

Marginal Rates and Tax Brackets for Married Filing Jointly (for taxable income)

Connecticut (Current)

3.0% > $0 5.0% > $20,000

Connecticut (Proposed)

3.0% > $0 5.0% > $20,000 6.0% > $250,000 7.0% > $500,000 7.5% > $750,000 7.95% > $1,000,000

Massachussetts

5.3% and 12% on capital gains and dividends

New Jersey

1.4% > $0 1.75% > $20,000 2.45% > $50,000 3.5% > $70,000 5.525% > $80,000 6.37% > $150,000 8.97% > $500,000

New York (Proposed)

4% > $0 4.5% > $16,000 5.25% > $22,000 5.9% > $26,000 6.85% > $40,000 7.85% > $300,000 8.97% > $500,000

BORROWING FICTION: Governor Rell: “In a way, I feel that they have just given up,” she said. “Just ring it up on the state’s credit card. No cuts needed. No questions asked. No tough decisions made. Just charge it.” •

FACT: The Governor included borrowing in her plan → She proposed securitizing energy funds in the amount of $350 million.

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FACT: The state used borrowing as a part of its deficit plans in 1989–1992 and 2002–2003, as well.