Gov. Rell proposed changes to Connecticut's state budget to
address the projected $500 million deficit for this fiscal year,
recharge job growth, and lay the groundwork for a more affordable, more efficient state government in the long term. With the deficit climbing, state tax revenues declining and joblessness increasing, the governor said this year's General Assembly must focus on just two issues: creating jobs and balancing the budget. "We need to get to work to put the people of Connecticut back to work," she said in her State of the State address. Her $18.9 billion budget revision has no increases in taxes or fees — including no new carwash sales taxes or fees.
It also includes the introduction of a new Keno game to raise revenues and it relies on federal stimulus dollars and shifts bond authorization dollars to fund incentives for small businesses.
Recognizing that small businesses are the state's main engine for job
growth, the Governor proposed help for small and midsize companies by expanding credit availability and creating a three-year tax credit for
new jobs.
The governor also proposed a three-year, $2,500 tax credit per year for the creation of each new net job in businesses of up to 25 employees, which would be very positive for carwash owners who seek to expand in the next several years.
Streamlining Government
With the state facing chronic budget problems and a mountain of
long-term funding liabilities, the Governor said lawmakers need to
acknowledge that "higher taxes are not the solution to our problems."
She proposed two initiatives to get the state back on sounder financial
footing.
A new Government for the 21st Century Commission would conduct a "top to bottom" review of state government this year and recommend ways to root out waste and cut the size and cost of state government.
Modeled after the federal government's Defense Base Closure and
Realignment (BRAC) Commission, the group will include members of each branch of state government and make recommendations by the end of 2010 to be presented to the Legislature for a straight up-and-down vote.
To tackle Connecticut's "financial Sword of Damocles" — unfunded pension liabilities of $9.3 billion and obligations for health care benefits for retired state employees of $24.6 billion — the governor is creating
through executive order a working group to explore solutions.
Representatives from the treasurer's and comptroller's offices, and
other state agencies will propose short — and long-term plans for
addressing the liabilities, with a first report due by July 1.
In addition, the Governor's budget revision:
• Increases the Governor's authority to cut state spending if the
deficit balloons to more than 3 percent of the size of the budget. (The
Governor can now cut up to 5 percent of appropriated funds. If the deficit moves to between 3 and 5 percent of the budget, her rescission authority would be increased to 10 percent of appropriated funds.)
• Sets up contributions to the state's Rainy Day Fund throughout
the year as surplus funds become available.
• Provides a loan forgiveness program for state graduates with
degrees or certificates in green technology, renewable energy, life sciences or health information technology.
• Prohibits the state from creating any additional unfunded
municipal mandates without a two-thirds vote of the General Assembly.
• Creates a $10 million Municipal Capital Assistance Fund to help
cities and towns purchase capital equipment ranging from data processing tools to trucks.
New Stream-Flow Regs
The Connecticut Department of Environmental Protection (DEP) has proposed new onerous Stream-Flow Regulations. The Connecticut Car Wash Association (CCA) is part of a coalition of businesses and towns fighting these proposed stream flow regulations. The DEP is pushing regulations that would set minimum flow standards for the state's rivers and streams and dramatically curtail the ability of current businesses to get water flow and for new economic development projects to start.
The Proposed Stream Flow Standards and Regulations were required by Public Act 05-142 directing DEP to develop regulations expanding current stream flow standards to include all rivers and streams rather than only those stocked with fish. The regulations will thwart economic recovery and reduce water supplies by imposing these regs on Connecticut businesses that will be too restrictive and costly.
Critics say the DEP has overstepped its bounds by implementing costly
regulations based on untested assumptions. The DEP plans to restrict all waterways and groundwater in the state when less than 1 percent of the rivers and streams have impaired water flow. For example, the town of Colchester likely would suffer a 10 percent decrease in its ability to supply water. It would need to spend about $300,000 to make up that capacity, dealing a great blow to Colchester's economic development plans and its government budget.
Statewide, between $170 million and $200 million would be needed to develop new sources of water because of the regulations that would
mandate the amount of water that is needed to meet customer needs,
something known as "safe yield," and would result in "major" supply
shortages in some towns. Livelihoods as diverse as farmers, carwash
suppliers and plumbing contractors would be hurt, by a massive program that is economically and environmentally unjustified.
The CCA will continue to work to promote fair and efficient regulations
that will help Connecticut recover from this economic crisis.
P.J. Cimini, Esq. is the CCA’s lobbyist and a partner in Capital Strategies Group, LLC, in Hartford. You can reach P.J. at 860/293-2581 or via email.
