In the second installment of our Friday series on regional politics, WSHU Senior Capitol Reporter Ebong Udoma speaks with Morning Edition Host Tom Kuser to bring listeners up to speed on the issue of taxes in Connecticut.
Here is a transcript from their conversation:
TOM: Last week Connecticut’s Department of Revenue Services (DRS) said it had overpaid as much as $11-12 million in property tax refunds to thousands of state residents. DRS Commissioner Kevin Sullivan said it was the result of an error in calculation. Sullivan says affected taxpayers would be allowed to pay back the money over time without interest.
Ebong, this episode seems to add insult to injury when Connecticut has a projected budget gap of more than $200 million this year.
EBONG: It seems that way. As a matter of fact, Republican lawmakers blame their Democratic colleagues for this. They say it’s happening because Democrats keep trying to increase state revenue by tinkering with the tax code.
TOM: You talked with Kevin Sullivan about this recently. What did he have to say?
EBONG: Tom you know, Sullivan, who’s a Democrat, and years ago was the State Senate President, agrees with the Republicans. He has an interesting take on Connecticut’s reliance on certain taxes. For instance, he says about a dozen state residents are responsible for sometimes as much as 40 percent of the state’s income tax revenue. So much so that as a matter of fact he was involved in attempts to try to keep one taxpayer not to leave the state last year.
The following is an excerpt from Ebong’s interview with Kevin Sullivan:
SULLIVAN: We track about 100 of the highest-wealth individuals every year. We do know that there’s a dozen or so of those individuals, any one of whom leaving the state, no longer a taxpayer here, would show up in tax collection. The case you are talking about, we were successful in at least keeping the business here, and all of the people who worked for that business here and all the people that work for that business. So it is in Connecticut’s interest to have a diverse tax base and to certainly have a fair amount of wealth here. It helps pay for everything the state does.
EBONG: Now, I was telling you, back from Nigeria where the government is having problems with its budget because it’s so dependent on oil revenues. And I come to Connecticut and we are having problems because we are dependent on the stock market, which is down because of the oil prices coming down. I never would have thought that Connecticut would be in the same position.
SULLIVAN: It’s a great comment because what it really reminds us is that we are not in the least bit isolated, whether it is town to town in Connecticut, state to state in the region, state to state in the nation, nation to nation in the global community, that we are very much an interrelated economy. And while the good news on oil prices is that the cost of purchasing fuel in many cases for businesses has gone down, it has had a dramatic effect on the stock market, which has depressed earnings and has depressed gains. So absolutely we are part of a global community economically and some portion of that economy gets a cold, we at least get the sniffles.
EBONG: Okay. Now let’s go back to the history of income tax in Connecticut. It was tough to get the state to adopt an income tax almost more than 20 years ago, now.
SULLIVAN: Longest year of life in the legislature you know.
EBONG: Tell us at that time the impression that was given was that this would help balance the state’s revenue source and it would stabilize the state going forward. How has it worked out?
SULLIVAN: Well I think you can still say that it’s done that, because we can look to other periods of time when it was strong and other parts of the tax structure were not as strong, for example, sales taxes and corporate income taxes. It is, however, the more you rely on it, and that’s what’s happened over time. We were not originally relying on it to the extent of 50 plus percent of the state budget. The more you rely on it, the more you are going to be susceptible to the swings, either in the marketplace or in some part of the marketplace, or in relative wages and income.
EBONG: Now in past years the state has adopted several measures to try and bring in more revenue or to get more people to pay up what they owe.
SULLIVAN: You can only do those things so much and so often. You really have to look to the economic base. And so the solution to Connecticut doesn’t lie in manipulating in any fashion the revenue stream. It actually lies, as Governor Malloy continues to point out, in renewing the thing that drives revenue, that’s the economy.
EBONG: What feeling do you have for where we will be on April 15th?
SULLIVAN: Well I don’t, you know at this point I don’t see any magic out there that’s going to rescue us in April. A remember a year ago some folks were saying there’s going to be a 25 percent jump in income tax collections in April. Of course there wasn’t. And there was no way that was ever going to happen.
EBONG: So bottom line for Connecticut residents listening to their tax commissioner is that revenues are pretty much as much as we can get right now so services will have to be cut.
SULLIVAN: It’s unfortunately true. I think that’s probably going to mean layoffs in my agency, which I’m not going to look forward to.
EBONG: How do you justify laying people off when we have to maximize revenue?
SULLIVAN: That’s a very good question. And I would say in my agency most of those folks probably make more money for the state of Connecticut than they cost to be here.
TOM: So, Ebong, it seems from what Sullivan is saying, people living in Connecticut should expect more cuts to services.
EBONG: Yes, Tom. That’s also what we are hearing from lawmakers working on the budget.
TOM: Ebong, thank you for your insights.
EBONG: Thank you, Tom.
