Hartford Business Journal

www.HartfordBusiness.com • March 11, 2019 • Hartford Business Journal 25 OTHER VOICES Tolls, like income tax, will hurt CT's economy By Joseph R. Sculley T hey say those who do not study history are doomed to repeat it. Everyone in Connecticut should study history of the creation of the state income tax, because the state ap- pears on track to being doomed to repeat a bad deci- sion by imple- menting tolls. When the income tax was being debated, it was pitched as the only way to restore fiscal stability. Since the new income tax would be created, significant sales-tax cuts were promised, and the sales tax rate was cut to 6 percent. That rate is currently 6.35 percent, but an increase to 7 percent is now on the table. Ad- ditionally, the initial income tax rates have also increased since its inception. Now, tolls are up for debate and are being pitched as the only way to secure revenue for the Special Transportation Fund. There are token offers to slightly cut fuel taxes in exchange for tolls. Tolls inherently increase once they go up, so we know that creation of tolls will be just like creation of the income tax. Once it's there, the rates will only increase. On the off chance that fuel tax rates are actually cut in conjunction with tolls, I'd be willing to bet that fuel tax rates would find their way back up, just like the sales tax rate has follow- ing creation of the income tax. I will never forget the night I was at a forum held at the UConn Law School about three years ago, when a legisla- tive leader from 1991 bluntly admitted that the idea of a spending cap was only floated to secure votes for the in- come tax. The income tax was passed, but legislative language implementing a spending cap was not put in place for more than 25 years. The spending cap was essentially meaningless, but it helped push through the income tax. Within the past year or so, some leaders have suggested that the state should be able to proceed with imple- menting highway tolls if and when a transportation lockbox was approved. A weak version of a lockbox was ap- proved by voters on Nov. 6, 2018. Less than four months later, Gov. Ned Lamont is already proposing to violate the spirit of the lockbox, if not the let- ter of the law, by proposing to stop the transfer of new car sales tax revenue to the Special Transportation Fund (STF). By law, that money is supposed to be deposited in the STF and be protected for transportation spending, but this proposal would do the opposite. Taking transportation money away from the transportation fund is ex- actly what the lockbox was supposed to prevent. It is hard to ignore the similarities between the spending cap and the lockbox. Our state has experienced an eco- nomic downturn since the creation of the income tax. It is hard-earned mon- ey being taken out of people's pockets, and the government has proven it does not use that money responsibly. Tolls will be hard-earned money that is taken out of people's pockets every day, while they are on the way to work to earn said money. The government has still not proven that it will use that money responsibly. I have a feeling that charging conges- tion price tolls (meaning higher prices during high-traffic hours), will lead to an economic downturn, just as the income tax did. Be aware that toll supporters are attempting several avenues to get tolls through, a process that began with the not-so-locked "lockbox." One such proposal is to create a quasi-government body called the Transportation Finance Authority, which would then create the tolls. Do not be fooled by this. Opposing tolls is important for the state of Con- necticut's future, and it is critical to prevent Connecticut from repeating history it does not want to repeat. Joseph R. Sculley is the president of the Motor Transport Association of CT, which represents companies with commercial vehicles traveling state roads. GOVERNMENT INSIGHTS Gov. Lamont's honeymoon period is over By Roy Occhiogrosso W ell, that was fast. Gov. Ned Lamont, who was sworn into office Jan. 7, has had a rough few weeks. It sure seems as if the honeymoon's over, which is probably a good thing, because it means he's doing the job that needs to be done. Lamont's honeymoon period was nearing its end before his first month in office was complete, with an idea being floated — apparently by the Lamont ad- ministration — that maybe it was time to talk about ex- tending the sales tax to groceries, albeit at a rate of 2 percent, which is well below the statewide sales tax rate of 6.35 percent. Reaction to that trial balloon was immediate and intense, and not in good ways. My thought at the time was, while I don't support the idea of taxing groceries, I do support examin- ing all the many sales-tax exemptions that exist to understand A.) why they exist, and B.) if they should continue to exist. Some of the exemptions we tolerate are absurd. Back in his first budget speech in early 2011, former Gov. Dannel P. Malloy, who also undertook the task of looking at these exemp- tions, noted that the state taxed yoga but not pilates. He asked if one was a more pure form of exercise, or if the yoga people had a better lobbyist than the pilates people. Everyone in the chamber laughed, but he got his point across: Oftentimes there's no rhyme or reason to how we tax certain goods and services. While Lamont took a lot of heat for the grocery tax idea, it did in fact prompt a discussion about the issue of sales-tax exemptions, which he then revisited when he presented his bud- get Feb. 20, by proposing to eliminate a bunch of exemptions. Then came the tolls issue, rolled out by the administration the weekend before Lamont's budget speech. Again, the reaction was swift and intense, and again, not in good ways. Although the main criticisms revolved around the way the administration rolled out the issue (in an op-ed, posted online in Hearst papers early on a Saturday morning), and whether or not Lamont was breaking a campaign promise, it did prompt a multi-day discussion about tolls. And then in his budget speech Lamont presented two options for tolls: the trucks-only one he talked about during the campaign, and a more comprehensive one to toll trucks and cars (but with a hefty discount for Connecticut drivers). As with a tax on groceries and a proposal to institute tolling, almost no one was happy with Lamont's overall budget proposal. Republicans said it taxes and tolls too much, many Demo- crats said it doesn't tax the wealthy enough, and many local elected officials hated the proposal that would have municipalities begin contributing to the teacher pension system. Labor doesn't like it because they're again be- ing asked for concessions. I could go on and on, but you get the point. Literally, I don't remember hearing one positive comment about the budget, except maybe from craft breweries, which were offered a tax break. What does all this unhappiness mean? It probably means Lamont is doing his job as best it can be done. Connecticut has a lot of problems that need to be fixed, chief among them the ridiculously underfunded public employee pension systems, and our crumbling infrastructure. Both of those issues will require billions and billions of dollars to fix. To the people screaming the loudest, here's a question: Where do you think the money should come from? You scream when a governor proposes a tax increase (on anyone, for anything) and you scream when he proposes to cut spending (for anything). Lamont has been saying since he be- came governor, in effect, "If you have a better idea, I'm all ears." So, to the people screaming the loudest, here's a suggestion: Take Lamont up on his offer. Put your ideas on the table. Or, stop screaming. Roy Occhiogrosso is the managing director of Global Strategy Group in Hartford, a public relations and research firm. He also served as a senior advisor to former Gov. Dannel P. Malloy. Roy Occhiogrosso Joseph R. Sculley

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