Just as the ink was drying on the new state budget, a cautionary note crossed Gov. Jodi Rell”™s desk.
It was written by state Comptroller Nancy Wyman.
“If first quarter trends continue, even after fully incorporating the projected revenue gains enacted as part of the budget, the revenue shortfall in the General Fund would exceed half a billion dollars.”
Ouch.
She said the so-called millionaire”™s tax ”“ one of those projected revenue gains ”“ probably won”™t help much since there continues to be an increase in job losses coupled with a drop in the payroll income tax.
You don”™t need a crystal ball to see what”™s coming around the bend for the state.
However, Wyman did offer this bit of hope: “Because it is early in the fiscal year, there is sufficient time for a reversal in the trend to mitigate the shortfall.”
That”™s being optimistic. How optimistic? Only time will tell.
The comptroller noted that income tax receipts through the third week of September were down nearly 15 percent when compared with the same time in 2008. Also off was the sales tax collection; it took a 10 percent hit.
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Combined, Wyman said, these taxes contribute about three quarters of nonfederal General Fund revenues that make up the $18.6 billion budget for 2010.
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One of the bigger problems with the state budget, as we have pointed out on this page before, is the use of rainy day funds and one-shot federal stimulus dollars.
Throw the other data into mix ”“ the loss of 70,000 payroll jobs between August 2008 and August 2009 along with artificial savings that Wyman mentioned in her letter to Rell ”“ and the outlook for the state looks anything but rosy.
The artificial numbers we refer to are the $473 million in expected state agency savings the lawmakers included in the budget without specifics for achieving that lofty sum.
“The policy changes required to produce that level of savings are, for the most part, not addressed” in the budget, Wyman wrote.
Never let details get in the way of pushing through a budget.
During the summer, Rell wrote in a letter concerning the budget to Secretary of State Susan Bysiewicz: “The flaws and failures of the tax and spending proposals contained in Senate Bill 1801 are manifest. It is neither balanced nor remotely realistic in its assumed ”˜savings”™ and ”˜spending cuts.”™ Rather, it pushes the pain of sacrifice off the state bureaucracy and onto the state”™s taxpayers. I cannot allow that to happen.”
Unfortunately it did happen.
When it comes time to pay the piper, we wonder how many businesses will endure the oppressive taxes and how many will continue to relocate outside the state?
What will be the tipping point for businesses in this state? When will they say enough is enough?
Well?
