Job creation and tax relief were the motivating themes of Connecticut Gov. M. Jodi Rell’s State of the State address delivered Wednesday in Hartford, the first such address Rell has delivered since announcing her candidacy in the state’s 2006 gubernatorial race.
Rell’s office indicated last week that increasing economic growth would be the key to the governor’s new agenda, and in her speech Rell proposed a wide-ranging set of ideas to stimulate job growth in the state, including reforming elements of the tax law, reorganizing the state’s economic development offices, and establishing a program of student loans targeting people working in “high-need” jobs, including those in science and engineering fields.
Rell’s proposed budget will be discussed by the legislature and is expected to pass towards the end of its session in May, state legislators said.
At the heart of Rell’s proposal is a $497 million plan to remove a municipal tax on automobiles, to be paid for by removing a $350 deduction that homeowners now take off their state income tax returns. Although some Democrats said they questioned the wisdom of Rell’s proposal, they said they appreciated Rell’s decision to start a discussion about property tax reform.
But some representatives, such as state Rep. Tim O’Brien, a Democrat from New Britain, said the governor missed an opportunity to talk about the state’s rising health care costs. O’Brien said Rell also did not discuss issues pertaining to education, particularly how to distribute funding equally to local schools.
O’Brien and state Rep. Patricia Dillon, a Democrat from New Haven, said that while they support lifting the car tax, they question the elimination of the property tax deduction.
“On the whole there were a lot of creative things in there,” Dillon said. “Even though I probably wouldn’t come up with the solutions she came up with, I’m glad on the property tax side she at least put it on the table.”
State Rep. Alfred Adinolfi, a Republican from Hamden, said the car tax was singled out for elimination because of its unfairness — a Mercedes driver in Greenwich could pay less than a Chevy driver in New Haven because of the different tax rolls of the two towns.
One interesting twist about the proposal to eliminate the car tax is that Rell has suggested reimbursing municipalities for 100 percent of the taxes they would have collected, even though most cities have collection rates far below 100 percent, said Derek Slap, spokesman for New Haven Mayor John DeStefano Jr., who is running for the 2006 Democratic gubernatorial nomination.
“[New Haven is] at an all-time high for property tax collection rate, so we probably, as far as our municipal books, have less to gain than others,” Slap said.
Although Dillon praised the governor for tackling the issue of job growth, she questioned the idea of increasing tax cuts for corporations. Rell proposed a number of such cuts, including eliminating the corporate tax surcharge, which would save corporations an estimated $47 million by 2007.
“We have a lot of fixed costs, and over time we engage in this binge and purge at the legislature, and we have a surplus and we cut taxes, and then costs increase and we end up raising taxes,” Dillon said.
Although Connecticut now has an estimated $537 million surplus, budget experts are predicting the state may experience a deficit within two years.
But Adinolfi said the tax cuts were necessary in order to stimulate business growth in Connecticut, a state that he said is plagued by particularly high energy costs.
“Even Mayor DeStefano is saying, ‘Jobs, jobs, jobs,'” Adinolfi said. “These corporations are not going to be attracted to [Connecticut] if we don’t give them an incentive to come here.”
Adinolfi also said that Rell’s decision not to discuss health care extensively in her speech does not mean that her budget does not address the issue. As the ranking member on the legislature’s Committee on Aging and a member of the Veteran Affairs Committee, Adinolfi said he has already discussed health care with the governor’s office, and he said it is an subject for which Rell has shown a great deal of concern.
Rell’s address marked the beginning of a new legislative term in Hartford. The term is a short one, lasting just 12 weeks, but representatives have identified a number of issues they hope to address, including comprehensive property tax reform, improved access to health insurance and prescription drug coverage, and fine-tuning the campaign finance reform bill passed during a special session late last year.