Connecticut Association for Human Services

Poverty and the safety net - and the danger from federal cuts

CAHS and the Coalition on Human needs are releasing a report today on the the new census data, and the potential impact that some upcoming federal cuts can have in low income residents in the state.
  • In Connecticut, 10.8 percent of people were poor in 2014 - roughly the same as in 2013.
  • The child poverty rate also remains stuck, with 14.9 percent of Connecticut children living in poverty in 2014 - roughly the same as in 2013, as well.
Poverty in Connecticut disproportionately affects people of color:
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  •  Nearly 21 percent of African Americans and 26.5 percent of Latinos in Connecticut are poor. In contrast, poverty for non-Hispanic whites is 6.1 percent.
  •  Nearly 15 percent of Connecticut children are growing up in poverty, and the statistics are worse for children of color: 30.5 percent of African American children and 33.4 percent of Latino children in Connecticut are poor.
The new Census Bureau findings add to the mounting evidence that programs like low-income tax credits, the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), and subsidized housing reduce poverty now and improve children's chances of gaining economic security in the future.   The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) lifted 69,000 Connecticut residents, including 35,000 children, out of poverty each year, on average, during 2011 to 2013.
Sequester budget cuts, however, are threatening this safety net:
  • Congress will cut 1,010 existing housing choice vouchers in Connecticut alone, although today 1 in 4 low income renters in the state pay more than half of their income in rent.
  • Cuts to the Earned Income Tax Credit and Child Tax Credit could push146,000 Connecticut residents, including 63,000 children, into or deeper into poverty.
You can find more details on the proposed cuts by downloading the full report here.

Census: bad news on poverty, good on health care

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New Census data released last week confirms something that we all probably knew: unemployment might be down and the economy might be growing, but the benefits are far from reaching everyone.
 
Poverty and child poverty rates in the state remain unchanged. Although the poverty rate edged up slightly ( from 10.7 in 2013 to 10.8% in 2014) the change is too small to be statistically significant. In layman´s terms, the difference between both numbers is small enough that we can´t say if the drop is really there. Child poverty also went up a bit (from 14.5% to 14.9%) but the change is also too small to be considered statistically significant.
 
What the data shows, however, is that racial disparities remain stubbornly high. The poverty rate in Connecticut among non-Hispanic Whites is 6.1%; the number climbs to 20.8% for Blacks, and 26.5% for Hispanics. For children, the gap is even wider. Only 5.6% non-Hispanic White Children are poor, compared to 30.5% for Blacks and 33.4% for Latinos. These disparities remain as wide as they were a year ago.
 
By county, the geographical differences in the state have not changed. Litchfield (7.5%) and Tolland (7.3% ) counties  have the lowest poverty rate, while New Haven (13.1%) and Hartford (12.2%) have the highest.
 
You can access the census data on their website. As usual, CT Voices for Children has an excellent write up.
Besides the disappointing poverty data, the Census release included a very important piece of good news: the Affordable Care Act (ACA) is working really well. The percentage of residents in Connecticut without health insurance dropped from 9.4 to 6.9%. The decrease is statistically significant - close to 90,000 people that did not have insurance last year have it now.

For children the drop is smaller, and not statistically significant, although the starting point was already low: only 3.7% of Connecticut children remain uninsured, down from 4.3% in 2013. Full coverage is within grasp.

The ACA is not just having positive effects in our small, progressive state in the northeast. Nationwide, the uninsured rate has dropped from 14.5% to 11.7% in one year. The decrease will be even steeper with wider Medicaid adoption, but the trend is in the right direction.

As usual, CT Voices have a policy brief covering this issue as well. You can find it here.


Better Choices: no more cuts

As you know, the Governor is looking for changes in the state budget during the special session. Better Choices for Connecticut has released a statement today in response, asking for a budget that protects critical services, invests in education, is not balanced on the backs of the poor and does not increase inequality.

You can find the full statement below, or you can download it as a PDF here.
 
Modifications to the New State Budget
A Statement of Better Choices for Connecticut

 We all want a budget that:

  • Protects critical public services and investments in the future of our families and our communities;
  • Helps rebuild our economy by investing in the education and infrastructure that businesses need to thrive;
  • Isn't balanced on the backs of our most vulnerable children and families; and
  • Doesn't exacerbate inequality by asking less of those who have the most.

In the budget that was passed by the General Assembly, our lawmakers took steps to address this year's budget challenge by refusing to ask the most from those with the least. Instead of cutting state support for vulnerable children, families, and communities, our elected officials chose to fund essential services by making our revenue system more equitable and progressive.

Once again, following outcry from a few of our state's largest corporations, we must remind our elected officials to make better choices. While these corporations claim that Connecticut's business tax burden is too high, a study by the Ernst and Young for the Council on State Taxation found that Connecticut businesses face the second lowest state and local tax burden in the nation.

While these few corporations talk about taking a more "balanced" approach to Connecticut's budget issues, they do not really mean balanced: they mean more slanted in favor of large corporations and the rich at the expense of working families.

  • A more balanced approach would recognize that the business tax changes in the new budget would affect only the largest and most profitable multi-state corporations - the very companies that already pay so little, so that families and small businesses have to pay more. If anything, we should tax those large corporations more, and small businesses less.
  • A more balanced approach would recognize that the highest earners in our state pay an effective rate in state and local taxes which is about half as high as working families pay, according to the state's own analysis. As enacted, the new budget asks only a little more from the wealthy.
  • A more balanced approach would tax high earners at closer to the same effective tax rates that we ask of working families. Even an additional ½ of one percent income tax increase on individuals earning over $500,000 per year, or couples earning over $1,000,000 per year, would (a) make up for all the revenue that would be lost by the corporate tax rollbacks the governor proposed, (b) leverage federal funding which would cover about one third of the increased taxes and (c) keep our effective tax rates lower than those in New York or New Jersey.

The enacted budget makes progress towards accomplishing these things by investing in infrastructure, beginning property tax reform, and protecting many critical services -- although it already includes hundreds of millions in cuts. If any "tweaking" is done on the revenue side of the budget, any revenue lost should be replaced by alternate revenue sources from those most able to pay. The members of Better Choices for Connecticut urge our legislature to protect middle class and working families. Not a single dollar more in cuts should be added in the implementer session.

One final note: as we said on Friday´s e-mail, we need to actively tell legislators that we can not have any more cuts. More info on who to call and talking points here.

Reminder: Connecticut is a really nice place to live

There has been a lot of talk after this year´s budget on how rotten our state is, how bad things are and how everyone seems to be looking for the exits. Here are CAHS we are not shy to point out many of the things that Connecticut does horribly, horribly wrong (from income inequality to regressive taxes, and don´t let me get started on how dreadful Metro-North is), but this whole "our state is terrible" thing needs to stop. Not just because people both inside and outside Connecticut are starting to believe it, but because it is flatly not true.

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Connecticut is actually a really nice place to live, and there is plenty of data to back that up. Let´s go over this.

  • Connecticut is one of the safest states in the country. The homicide rate is about half the national average, and dropping rapidly.  We are close to the bottom in violent crime rates, and in the top-10 in lowest overall crime. Scary headlines aside, this is a very safe, very pleasant place to live in.
  • Taxes are actually fairly low, considering how wealthy the state is. Bill Cibes already wrote about how low business taxes actually are, but this extends also to other taxes. State and local taxes as share of personal income is just 16,7%, compared to the 18.7% national average. Connecticut had the 6th lowest burden in 2012; even with recent tax increases, our rank has barely bulged.
  • Connecticut schools are stellar. Only Massachusetts has better test scores; even compared with other countries, our schools fare better than students in places like France, Denmark or Ireland.
  • Health-wise, Connecticut has the 3rd highest life expectancy. In most health indicators (obesity, smoking, low birth weight, diabetes) we are at the top or close to the top of the pack.
  • Of course, the state is still one of the wealthiest in the country, and one of the wealthiest places on earth. Income mobility is well above the national average, as well, meaning that we have better, stronger ladders to reach the middle class.
  • If we take all into account (income, health, education, crime, economy) we are arguably the best state by some accounts.

And all this without having to mention how pretty the state is, how pleasant our towns are, how good New Haven pizza is and how nice and civilized life is here.

Sure, Connecticut has problems. The weather can be pretty dreadful sometimes. Housing is incredibly expensive. Income inequality is a huge issue. Some of our cities and towns are not sharing much of our prosperity. Our roads have way too many potholes. There are many things we need to work on. We have our share of problems and issues.

But in both relative and absolute terms, no matter where you look, Connecticut is a great place to live. Crime is low, taxes are reasonable, health care is great, education is fantastic, opportunity still abounds, and we have the best pizza. No matter how much we whine and complaint about, we should not forget that.


2015 budget recap - it could have been worse

 

The 2015 legislative session is over, and there is a lot to discuss. There were quite a few good bills passed, some good bills that fell short, and a budget that is not what we were hoping for, but that could have been much worse. Let´s have a quick look.
 

1. The budget: a general overview
The budget was late this year. So late, in fact, that it only got approved in the Senate half an hour before the official end of the session, meaning that many good bills never got a vote.
 
The final budget was the result of a compromise between the initial Governor´s proposal that included more cuts and the Finance and Appropriations Committee versions that included more revenue. As you might expect, the approved budget ended somewhat halfway between both.
 
Revenue:
 
Yes, the budget raises taxes. Quite a few of them, in fact; most of them fairly progressive, and with close to no effect on low-income families or the middle-class.
 
  • A more progressive income tax: the budget creates two new tax brackets, one for families making more than $500,000, one for families making over a million - roughly, 2% of taxpayers. This raises $151 million.
  • Data processing tax: data processing services paid a 1% tax in Connecticut, thanks to an exemption.  The budget raises it to 2% in FY16, for $40 million of revenue, and 3% in FY17.
  • Tax expenditures: things like internet services, car washes or motor vehicle parking are no longer tax exempt ($60 million)
  • Cigarette tax:  25 cents more a pack, raising $25 million.
  • Unitary/combined reporting: many companies that operate in more than one state declare that their earnings and profits happened outside Connecticut to avoid paying corporate taxes. Combined reporting is an accounting requirement used by every other state in the Northeast to prevent that from happening. It will raise $39 million.
The one tax change that it is somewhat middle-class unfriendly is the reduction of the  property tax credit from $300 to $200. Although it does affect the middle class, the budget includes a significant amount of property tax relief in other places - and for most, that tax cut will amount to more than $100.
 
All in all, the budget has $821 million in new revenue, with the rest of the money coming from delayed tax cuts to business and hospitals. A significant amount of the new revenue, however, will not go to the General Fund - the budget includes $159 million inproperty tax relief (more on that in a second) and $159 in new spending (in theory) for the Governor´s transportation fund.
 
One final note: despite all the chatter saying otherwise, Connecticut´s business´taxes are still very low compared to the rest of the country.
 
Spending:
 
What are we going to be paying for with this new revenue? Well, quite a few programs that were going to be completely eliminated or severely cut in the Governor´s initial proposal were fully or partially restored. Although there are still quite a few cuts (a lot of programs are either flat-funded or facing 5-10% reductions), the budget preserves many crucial services. The most important are:
  •  HUSKY A: pregnant women will not lose coverage. Regarding parents, eligibility will be reduced from families below 201% of the Federal Poverty Line to 155%. Significant, but much better than the initial cut to 138%.
  • Behavioral Services: the budget restores most of the cuts.
  • Higher Education: many of the cuts are reversed. Remedial education funding saw its cut reduced from $13 million to $4 million, retaining $19 million in the budget.
  • Medicaid rates: rates to Medicaid providers are cut $10 million, instead the $43 million originally proposed.
 
We are still compiling information on all the cuts, but the bulk of social programs fared fairly well. It is not a great budget, and some of the service reductions are going to be painful, but it is better than the Governor´s original proposed budget.
 

2. The good: 
Early childhood, education, housing and tax reform
 

The session ended with some very positive changes, with several good programs and policies passing the legislature, and some key programs being protected. Let´s go over the highlights:

Early Childhood

  • Many valuable programs that were under threat remain funded, albeit with some cuts: Community Plans, Early Literacy, Help Me Grow and Parent Trust Fund.
  • The early childhood teaching qualification mandate was delayed for two years, and the Office of Early Childhood will be preparing a plan to achieve the qualification goals.
  • Restrictions were passed on out-of-school suspensions and expulsions for students in grades between preschool and two.

Education

  • School absenteeism: the legislature passed legislation requiring districts to compile information about absenteeism rates and plans to address it. The Department of Education will also draft plans in this area.

Housing

  • Additional funding for support services and rental subsidies for re-entry programs ($1.9 million)
  • Additional funding for services for the homeless, including youth, wraparound services and veterans.

More information on housing here.

Health

  • Coverage for low-income pregnant women under HUSKY A was restored.

Tax reform:

The budget includes some significant changes to the municipal aid and property tax systems.

  • The formula used to distribute PILOT funding (state aid to compensate towns with non-taxable property owned by non-profits, colleges and hospitals) was revamped, providing more funding to the poorest cities in the state.
  • Car property taxes were capped at 32 mills in FY2017 (29.36 after), bringing significant tax cuts to many cities and towns. The state will use 0.5% of the sales tax revenue to compensate municipalities that lose revenue with this cap.

The one missing piece for S.B.1 that was weakened significantly was the commercial property tax revenue sharing; all towns in a region will have to approve it in order to go into effect, and only 20% of the new revenue will be shared.  You can find a full list of the new funding for each town, as well as the tax saving from the car tax cap, here and here.

In addition, the legislature approved some welcome changes to how it manages its rainy day fund (following the work from our partners at CT Voices for Children). You can find more information here and here.

Also, slightly unrelated, the legislature´s 20-year long fight around bow-hunting is finally over.

3. The bad: 
Two generation strategies, budget cuts

Two Generation Strategies

  • The bill passed the Senate with broad bipartisan support, was amended and passed the House, went back to the Senate... and missed the deadline for passage after the budget was filibustered.  The budget has funding for this program, so CAHS and other two-gen advocates will work with legislators to include it as part of the implementer bill during the upcoming special session.

Early Childhood

  • Early Care Wages: Despite the deadline for higher preschool teacher qualifications being pushed back two years, the low wages associated with early care remains an issue.  If teacher salaries are not addressed in conjunction with the higher qualifications, there remains the possibility of a continued shortage of qualified early care providers in state funded programs.

Health

  • Medicaid reimbursement rates for providers were decreased. There is a possibility that some providers might stop accepting Medicaid patients, weakening the program.
  • The income limit for parents under HUSKY A was cut from 201% of the Federal Poverty Line to 155%. This means that more than 23,000 parents will have to purchase insurance through Health Access CT, having to pay premium and face deductibles.
Cuts upon cuts:
 
  • Although many programs were preserved with small cuts, it is important to remember that many of these cuts come after years of level funding. The amount of money Connecticut spends on many crucial programs has been steadily shrinking for almost a decade, with no end to the cuts in sight. This budget is not as bad as we feared, but we need to keep in mind that we are not really keeping up with the needs of low income families in the state - on the contrary, we are allowing the safety net to erode, slowly and steadily.

4. The ugly: it is not over yet!

As mentioned above, the legislature´s job is not over yet. As the budget was approved so late, the implementer, the piece of legislation that includes all the details on how the money will be spent (as well as some additional bits and pieces that did not make it as a bill on time) did not get a vote.

This means we are facing a special session, with more budget discussions, before the end of the month. On the agenda we will likely see the implementer, the Governor´s Second Chance Society initiative and some talk to tweak the revenue package of the budget.

If we look beyond the next two years, it looks like the state will again be facing deficits in 2017. We will leave the ongoing fiscal crisis that the state faces and its sources, however, for another e-mail.

One final note: 

It would be a good idea to reach out to your legislators and thank them for their work on the budget. They made some hard decisions and tough choices, including a tax increase that has proven controversial.

The same way we have been hounding them to reverse the cuts for the past few weeks, it is time to call or e-mail them and support their work, and remind them that Connecticut business taxes are actually fairly low by US standards.

5. What´s next?
 

The implementer fight, and maybe yet another round of tax and revenue talks in the upcoming special session. Stay tuned!


We are hiring! - Program Director

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CAHS is is looking for a new Program Director!

If you want to join us to advance CAHS’ mission to reduce poverty and build family economic security, we have an opening for you. The Program Director will be managing, growing, and evaluating our community-based programs; the job requires cultivating partnerships throughout Connecticut.

We are looking for someone creative, that can help us fund and bring to scale financial capability programs that show promise and demonstrate effectiveness, including access to benefits, free tax preparation, financial education and coaching, and asset-building. The Program Director also works collaboratively with the Policy and Research Directors to mutually reinforce and support CAHS’s Family Economic Success (FES) mission.

You can find the full details and how to apply for the position here. Send your resume and cover letter to resumes@cahs.org if you want to apply. Full details on the job posting after the jump.

Title: Program Director
Employment Status: Full-Time
Reports to: Executive Director
Supervises: Program Staff (tax prep, financial education, financial coaching, volunteer coordinators; VISTAs)

Summary: Connecticut Association for Human Services (CAHS) seeks a Program Director to advance CAHS’ mission to reduce poverty and build family economic security by managing, growing, and evaluating our community-based programs.  The Program Director cultivates partnerships throughout Connecticut to fund and bring to scale financial capability programs that show promise and demonstrate effectiveness, including access to benefits, free tax preparation, financial education and coaching, and asset-building. The Program Director also works collaboratively with the Policy and Research Directors to mutually reinforce and support CAHS’s Family Economic Success (FES) mission.

Duties and Responsibilities:

  • Oversee and support existing programs, including Volunteer Income Tax Assistance (VITA), access to benefits, CT Money School, and Financial Coaching, and build programs to empower low-income people to achieve financial stability.
  • Maintain a results-based culture in which information that demonstrates the effectiveness of our programs is collected, maintained, and communicated using standardized tools.
  • Hire, train, and manage program staff with diverse skills and backgrounds.
  • Support the professional development of program staff through daily support and expanded training, workshop, and conference attendance.
  • Establish and maintain relationships with social service and community providers across the state.
  • Seek and secure funding (grant applications and prospect research and cultivation) to maintain and expand our FES programs.
  • Maintain positive relationships with funders, including progress and outcomes reports, and periodic meetings.
  • Outreach to expand the awareness and presence of programs by coordinating the distribution of informational materials via media, social media, and community provider networks, in concert with other CAHS staff.
  • Support internal communications among staff and build positive organizational culture.
  • Develop and maintain relationships with CAHS Board members on program issues, including help coordinating board committees.
  • Attend and present at local, regional, statewide, and national meetings and conferences, representing CAHS as a leader among state FES program coordinators and operators.
  • Work with CAHS staff as a team member to build policy-informed programs and program-informed policy.

Required Qualifications:

  • Bachelor’s Degree and a minimum of two years supervisory experience.
  • Proven ability to organize and execute outreach and marketing plans.
  • Strong organizational, leadership, and interpersonal skills: verbal and written communication skills (including public speaking), ability to manage competing priorities and work under deadlines; ability to integrate CAHS mission into projects and communicate their importance.
  • Experience working with people from a variety of cultural and economic backgrounds and at different organizational levels.
  • Ability to manage and motivate multiple staff, and collaborate with and inspire stakeholders.
  • Computer literate with spreadsheets, database programs, and presentation software; detail-oriented.
  • Grasp of complex program regulations and ability to effectively communicate them to staff and service provider partners.
  • Knowledge of funding landscape in Connecticut (e.g., private, corporate, federal, and foundations). Experience writing and managing grants required; experience with federal grants helpful.

Preferred Qualifications:

  • Master’s degree in a related field (social work, public administration, human services, etc.).
  • Experience in programs related to the economic stability of lower-income households.
  • Community organizing, and/or other social service experience helpful.
  • Experience providing technical assistance to nonprofit groups, and/or with community organizing, extremely helpful.
  • Program evaluation experience or training helpful. Results Based Accountability exposure a plus.
  • Creative and energetic problem solver.
  • Friendly, flexible, confident and assertive combined with a sense of humor.

Compensation & Benefits:

  • Competitive salary and benefits, including health and dental insurance, mileage reimbursement, retirement plan, life insurance.

How to apply
Please send cover letter, current resume, and a writing sample, to Resumes@cahs.org

Location
110 Bartholomew Avenue, Suite 4030, Hartford, Connecticut, 06106


The Finance Committee budget- revenue and tax reform

Wednesday we talked about the spending side of the budget; where money is going and which programs were cut. Yesterday the Finance Committee released the other half, revenue, or where the money is coming from to pay for all those services.
 
For the second time in a row, we have a budget proposal that includes quite a bit of good news.

1. The budget: revenue overview
Let´s start with the obvious: new revenue means taxes. The Finance Committee budget brings in more money, so it is taxing more stuff, and they are doing this in a pretty smart way that deserves some attention.

First, let´s see where the new revenues are coming from (PDF):

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If you look at this numbers, you will immediately see that this is a lot of money - more than the amount the Appropriations budget actually calls for. There are two main reasons for that.

First, some of the new revenue raised will not go to the state coffers, but to municipalities. Paired with the new revenue package, the Committee passed S.B. 1, a fairly ambitious property tax reform bill. This proposal includes some clever ideas on property taxes, and instructs that part of the sales tax money will go to municipalities. More on this below.

Second, because the sales tax will cover more services and products, the state will actually lower the rate.This will leave enough room to cover the additional spending on the Appropriations side while avoiding some of the impact from the tax increase.

To sum up, the total new revenues add up to just shy of one billion. Of that money, $294 million would go to municipalities, and $253 are used to lower the overall sales tax rate. With Appropriations adding $289 million in spending, the budget actually ends up having a small surplus.
Now let´s look at the numbers with some detail.
2. The budget: the sales tax

So let´s take a closer look at the sales tax: what are the exact changes included in the Finance proposal?

The Finance Committee proposal is based on broadening the tax base.

In non-jargon, the current sales tax is far from comprehensive: there are a lot of products that are not taxed (they are exempt), and services are only taxed if included explicitly in legislation. The Finance Committee´s plan eliminates quite a few exemptions (some of them were already included in the Governor´s budget proposal) and adds to the list of taxable services. This is similar to the recommendations offered by CT Voices in their March revenue proposal.

What exemptions are eliminated?

The two big items are clothing and footwear under $50 (raising $137 M) and computer and data processing (raising $162 M).

What services are now taxed?

The list is fairly long - you can find it here. The ones that raise the most revenue are engineering services, public accountants and consulting services. Most of the changes are items that really never made much sense to be tax exempt, like interior designers, golf courses, country clubs and direct mail advertising,

All in all, it does add up to a good amount of money: $322 Million.

What will be the sales tax rate now?

By the end of the year, 5.85% for the state portion of the sales tax; 0.5% for municipalities. The state rate would be reduced to 5.35% in 2016, leaving the combined rate at 5.85% next year.

Are these changes regressive?

The sales tax is indeed fairly regressive, however the slightly lower rate actually should favor lower income households. The services added and most exemptions do not affect poor families all that much, although the clothing exemption does. It is too early to tell how this will impact families without running some numbers.

The municipal .5%, however, will be used to lower another tax that it is really regressive: car taxes. More on that in a bit.
3. Other taxes: income and capital gains

The changes on income and capital gains are a bit more straightforward: just a slight increase in rates.

Income tax:

The top marginal rate (for individuals making more than $500,000 a year or couples filling jointly making more than $1,000,000) will go up from 6.7% to 6.99%. Note this is the marginal rate - that is, for each dollar that an individual makes over $500,000 he would pay about 6.99 cents instead of 6.7. The top tax rate will still be well below New York, New Jersey and Massachusetts, so we are still competitive in this regard.

Although small, the change raises significant amounts of money: $102.4 Million.

Capital gains:

Taxpayers in the highest income bracket (more than $500,000 for individuals, $1,000,000 for couples) will pay a 2% additional tax on all capital gains. This will put Connecticut in line with New York for top earners, and still below New Jersey.

The new supplemental tax would raise $167.6 million.
4. Other taxes: odds and ends

There are quite a few minor changes in the Finance proposal, the most relevant being tweaks on the hospital tax, closing some loopholes by introducing combined reporting for corporations (basically preventing businesses from claiming that they made profits in another state), the elimination of the business entity tax and Keno.

Yes, Keno again. It really does not raise that much revenue ($13.6 M in the first year, $30 M in the second), but it is again in there, somehow.
5. Property tax reform: S.B. 1 and the sales tax

We have been talking about property taxes quite a bit for the past few weeks. The current system is not only terribly regressive but steers investment away from poorer cities.This has been an area that the FESC wanted to address.

The Finance Committee is tackling this issue with S.B.1, adding a few very interesting tweaks. We mentioned that the sales tax now has a 0.5% portion that goes to municipalities; this bill actually details how the money would be used. It has four main components:

Motor vehicle tax changes:

The car tax is now capped at a mill rate of 29.36. There are 57 municipalities with taxes above that threshold - part of the money from the sales tax will be used to compensate them for the lost revenue.

This change would limit (but not close completely) the gigantic disparities in rates that the same car can pay if registered in a different town, a very positive reform.

Changes to PILOT grants:

PILOT stands for "payment in lieu of taxes". This is a grant that compensates towns with a lot of non-taxable property (state buildings, non profits hospitals, etc.) for the loss of revenue. S.B.1 tweaks the formula to give priority to the towns with the most non-taxable property. They also happen to be the poorest cities, so it is also a positive change.

Regional revenue sharing:

An idea we have described earlier, although with 20% of new commercial/industrial revenue growth shared instead of the 40% of the original bill. It is a bit less effective, but still a very good reform.

Regional program incentives:

About 10% of the funds coming from the sales tax would be used to establish cooperative regional programs to create efficiencies and reduce costs.

All in all, these are good changes - maybe a bit less ambitious than the bill that came out of the Planning Committee, but positive changes nonetheless. The car tax change will represent a hefty tax cut to city residents and many inner ring suburbs, PILOT will dedicate more resources to poor towns, the revenue sharing will help balance growth and regionalization incentives can help reduce the costs of providing municipal services.

The bill has strong support from the leadership, so it has a good chance to make it to the floor. If you have not talked with your legislators about property tax reform, it is time to start.
6. What´s next?

Still a long way to go until the budget is done. The Finance package includes quite a few big ideas, so once it gets to the floor, expect some back and forth discussion.

What it is important to do now is to contact your legislators in the Finance Committee and thank them for their efforts. This is a very difficult budget that needed some tough budget choices. The budget includes new revenue and some significant reforms on how we pay education (remember- that´s what property taxes are for!) in the state. Our legislators made the hard choices, and they deserve some recognition.

We had some very good news in the budget process this week. We are not done yet, but we are moving the needle - things are going in the right direction. Stay tuned, as there is more to come.


The Appropriations budget - quick notes

1. The budget: a general overview

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The Governor´s budget proposal included $590 million in spending cuts. As you probably recall, many of them were painful, with some deep cuts to programs like Husky A and education. The Appropriations budget (HB 6824, for those looking for it), in comparison, would spend $470 million more than the Governors proposal - that is, it only has $120 million in cuts.

The result is a budget that although it still includes quite a few cuts (and no inflation adjustments) it does much more to preserve essential services. Appropriations deserve a good deal of praise for this document; if you legislators sits in the committee, you should give them a call and thank them for their efforts. It still is a tough budget year, but the committee members have stepped up in many ways to make things better.

Of course, there is something that needs some discussion: the spending cap. Appropriations considers that long term payments to the state´s many pension funds (teachers, state workers...) should be consider debt, not spending, and consequently should not be counted as spending under the spending cap. The CT Mirror has an excellent overview on this subject here. We support the actions that the committee has taken in this regard; pension obligations are debt, and should be considered as such.

For a good bird´s eye view of what is on the budget, the Mirror has an excellent tracker - you can find it here. With all that said, let´s have a look at the changes that are relevant to our agenda.
2. The budget: social programs

There are quite a few very positive changes in this area - I will list the most relevant ones, both from the perspective of how many low income families are affected and based on our agenda.

Health:

The most important change is, by far, the restoration of funding for Husky A parents and pregnant women. Under the Governor´s proposal, parents of kids in households between 138% and 200% of the federal poverty line would have lost coverage and be shifted to the health exchange. Pregnant women would be forced to the Access Health CT website, as well. All in all, 34,000 people would have had their coverage severely reduced.

The Appropriations budget proposal reverses these changes ($44 million), and also reduces some of the cuts in Medicaid reimbursement rates ($27 M). Both are welcome changes.

Workforce:

Funding is partially restored for Cradle to Career and STRIVE. Cuts remain on I-BEST funding (although part of it would be redirected through other line items) and Youth Service Prevention Grants.
3. The budget: Education

A lot of good news in this area, as well. We have not looked at the funding streams for K-12 in the municipal side of things, but many programs are back on the budget, and there is even room for some very pleasant surprises.

Two Generation Strategies:

CAHS has been talking about two-gen strategies a lot for the past few months, working with many of our FESC and Early Childhood Alliance partners on this area (more information on these programs here).

The budget includes $2 million to launch pilot programs in several communities, following the recommendations of the state task force.

We will be talking a lot more about two-gen strategies in the coming weeks, so stay tuned!

Early Childhood:

The budget includes $5 million of additional funding for full year school readiness. It also partially restores several key programs:
-Community plans for early childhood ($712,000)
-Head Start Link ($720,000)
-Children Trust Fund, including Help Me Grow and Family School Connection ($882,000)
-Early literacy ($142,000)

K-12 Education:

Some changes here, as well, although not everything is additional funding. Charter and magnet schools actually lost some money ($7.7 and $3 million, respectively); some programs did not get restored, like Wrap Around services (only got $25,000), Parent Universities and School to work.

A few key programs were partially restored: LEAP, Neighborhood Centers and the Parents Trust Fund program.

Higher Education:

Of all the changes the most relevant for us is the restoration of almost $14 million to the Board of Regent´s Transform SCSU grant, and more specifically, the fact that the budget earmarks $27 million for remedial education, including the new partnerships with adult education providers.

Besides that, Uconn gets some of its funding restored ($26M), and the Governor´s Scholarship program can now cover some private universities.
4. The budget: Property Tax Reform

One thing that should be getting more attention: the budget includes $41 million in funding for S.B.1, the property tax reform bill that is currently being discussed on the Finance Committee.

We have talked about the bill in a couple of policy briefs (here and here); it is a very good reform that would greatly help poor cities and towns. The car tax portion will likely see some significant changes and we will likely see tweaks to the PILOT reform and regional revenue sharing, but the bill seems to have quite a bit of support.

If you care about education funding or urban economic development in the state (and you should!), it is time to start bringing up that you support S.B.1 to legislators, especially if they sit on finance.

One final note:

I mentioned at the beginning of this post l that it would be a good idea to reach out to your legislators in the Appropriations Committee and thank them for their work on the budget.

The list of changes is impressive, and they will be getting quite a bit of flak on some issues like the spending cap. The same way we have been hounding them to reverse the cuts for the past few weeks, it is time to call or e-mail them and support their work. We are still quite far from a final budget, so we will need all the allies we can get.


The economic impact of low wage work

Low income workers often need help to make ends meet. As we have discussed in previous articles, many Connecticut families that have one or two adults working full time have wages that still leave them under or close the poverty line. Even with recent increases in the minimum wage, many jobs in the state just do not pay well enough for a family to become self-sufficient.

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State policy thankfully tries to address it by offering low income and poor households a slew of public benefits. These benefits are often what is keeping these families afloat and enabling them to make ends meet - without Husky, Medicaid, SNAP and other public programs these low wage workers would struggle even more.

These benefits, however, have a real fiscal impact on public finances. As many companies and corporations pay their employees wages that are barely enough to make them self sufficient. Daniel Kennedy, Stan McMillen and Louise Simmons, three PhD researchers, have produced a detailed analysis on the gradual increase of low income jobs in the state, and how job creation in the past decade has mainly happened in low-pay occupations, with more and more workers only having access to positions that do not pay enough to make ends meet. More than half of the new jobs created in the state since 2010 are at the bottom 25th percentile, wages wise, meaning that most of job creation are on low-paying, barely making ends meet positions. Hourly earnings have barely increased in the state since the recession ended; nationwide, they have increased 8%.

This is bad for the families in these jobs, and also for the state budget: according to their estimates, Connecticut spends $486 million a year paying for health insurance and income supports to families that are employed full time.

You can download the full report here.


Car taxes in CT: an unfair deal

Property car taxes in Connecticut are collected at the local level. Each municipality determines its own mill rate for the tax, creating significant disparities. The same car can be taxed in two towns at completely different levels – and the poorer cities often are the ones that bear the heaviest burden.

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To pay as the same taxes as a Hartford Resident for a 2007 Corolla, a Greenwich resident needs to own a 2015 BMW M3 (worth $60,000).

Senate Bill 1 seeks to reform this disparity by creating a statewide car tax system with a uniform mill rate with a $3,000 exemption. Under S.B.1 municipalities would be held harmless, and all taxpayers in the state would face the same tax burden.

You can download a one pager on CT´s property tax and the car tax here.



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