Posts published in “Connecticut Newspapers”

Here’s a budget update you won’t get from Hartford. Tax revenue this fiscal year will be down from the already drastically reduced projections issued just a month ago.

Back on May 1^st, state budget masters reduced projected Connecticut state individual income tax revenue in two key categories by $2.0 billion over four years, including a half billion-dollar reduction for this fiscal year with only two months to go at that time.

A half billion-dollar annual reduction is a big reduction when total general fund tax revenue will average about $23 billion per year over the four years. For the current fiscal year, this represents not only a big reduction, but a big miss if you already have 9 to 10 months of actual data in hand. The tea leaves could and should have been read months earlier.

Even so, the big miss this year is actually going to be much bigger. The revised projections were for gross tax receipts. Yet, refunds have skyrocketed this fiscal year. As a result, net individual income tax receipts for Estimates & Finals (E&F) and the Pass-through Entity Tax (PET) are down much more than a half billion dollars.

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On May Day, Connecticut state budget masters wiped away $2.0 billion of expected tax revenue, without much notice.

May Day, May Day, we just lost $500 million annually over four years in a state with an annual general fund budget of just over $20 billion. That was not the general reaction, though it should have been.

The Nutmeg State cannot afford the sudden loss of $500 million per year, as projected in the new official state tax revenue forecast, jointly released Monday by the Office of Policy and Management and the Office of Fiscal Analysis.

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April is tax season, as taxpayers are painfully aware. Every year a large proportion of individual income taxes are paid in April. But, depending upon the economy and stock market, April tax payments vary significantly year to year and their composition even more so.

In April 2019, individuals across the land paid $397 billion in income taxes. Of that, $263 billion were “other” taxes, namely taxes on non-wage income. Three year later, in April 2022, individuals paid $642 billion, of which a whopping $515 billion were other taxes, mostly from stock market gains.

The hundred-billion dollar question in Washington these days is how much will arrive this month.

Following the national pattern, the one-billion dollar question in Hartford is how much will arrive this month.

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Connecticut tax revenue is likely to plunge in the last four months of the current fiscal year, taking annual tax revenue down about $1.1 billion below the official forecast, according to a new study by The Townsend Group which I head.

That’s a big miss in a state with total annual tax revenue of about $22 billion. It is a huge miss, given that we already know how much taxes have been collected for two-thirds of the year.

The miss relates exclusively to tax revenue derived largely from investment activities.

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The most consequential change in the role of women is getting scant attention during Women's History Month.

A rising percent of women in the developed world do not intend to have children. In a 2021 survey by PEW Research, 44% of childless U.S. adults of childbearing age said they were “not too likely or not at all likely” to have children, up from 37% in 2018. These are alarming numbers. They cry out for follow-up research.

Are they a temporary hangover of  the pandemic, during which births actually increased among the college-educated according to other research, or an acceleration of ongoing trends, some good but most not so much?

So, why don’t childless U.S. adults want to have kids?

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Almost two months ago, we reached the ceiling on the national debt. On its natural course, the debt would have blasted through the $31.38 trillion ceiling. So, the Treasury Department began implementing “extraordinary measures” to avoid breaching the limit. Treasury estimated that it could keep the debt under the cap for roughly five months.

Congressional Republicans say there must be a plan to cut the massive deficit spending which has fueled the recent rapid escalation of national debt.

The so-called responsible faction in the debt ceiling debate says that the ceiling should be raised without any preconditions -- without any risk of default.

There’s a group of about 20 House Republicans—who originally opposed Kevin McCarthy’s speakership—who have announced their adamant opposition to raising the ceiling without meaningful spending cuts.

In turn, the responsible faction has reared up in indignation and labelled this small faction irresponsible and worse.

But who’s really irresponsible?

This small group or the Biden administration and congressional Democrats, who have been borrowing and spending massive amounts for two years.

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Two weeks ago, the lead editorial in The Wall Street Journal compared New York State and Florida “by the numbers” in an exercise The Journal described as “comparative governance.”

The exercise merits emulation. So, let’s add “the numbers” for the Nutmeg State alongside those that the Journal displayed for the Sunshine State and the Empire State. To The Journal’s chosen metrics, I have added just a few, without which the number set would not capture the fiscal reality of Connecticut.

Now let’s compare Connecticut to New York. Forget a comparison with Florida.

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Last Thursday, Governor Ned Lamont announced a plan under which the state would give $20 million to a non-profit which, in turn, would use the money to buy $2 billion in uncollectible unpaid medical bills from the state’s hospitals, and, then forgive the debt.

That would seem a good deal, with such a small cost to forgive so much debt.

Yet, at one cent on the dollar, it is a huge $1.98 billion loss for the state’s hospitals. But they appear to be willing participants, because they haven’t been able to collect this debt and may already have written it off.

The Bernie Sanders of the world will rejoice, because the debtors will wind up having received essentially free health care.

But we should remember the donation-seeking credo of the non-profit Connecticut Mirror newspaper which broke the story: “Free to Read. Not Free to Produce.”

This medical care may wind up being free to these patients, but it was not free for the hospitals to provide. There is no such thing as “free.” Someone always has to pay.

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The last time the stock market plunged as drastically as it did last year was 2008. Afterward in 2009, federal income tax collections from non-withheld (non-wage) income, mostly investment income from the 2008 stock market, plummeted 31%.

After last year’s stock market plunge, Connecticut budget officials are forecasting only a 15% decline, according to the new Consensus Revenue Forecast.

If past is prologue Connecticut should experience at least a 30% decline. That would put tax revenue $1 billion below the just-released new Forecast, wiping out a large chunk of the newly projected $3.1 billion budget surplus for fiscal 2023.

Yet, no one will know until April, when almost half of all such revenue arrives, following good years in the stock market, bad years and flat years. In the months beforehand, little non-withheld income tax revenue is ever received.  

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• Read in Hearst CT newspapers