In today’s email:
- Budget updates: a tentative budget agreement
- Action alert: protect the EITC
- Budget updates: next steps
- CT Voices update: we are hiring!
- Federal update: breaking the ACA, fixing the ACA
House and Senate leaders have announced a tentative bipartisan budget deal.
This is the extent of what has been announced thus far, as details of the plan are under wraps until leaders share them with their respective caucuses. The deal appears to be a positive development; as of October 1st, the lack of a budget and governance by executive order meant deep cuts to many programs and municipal grants. This has led to damaging cuts in key services and has forced cities and towns to consider either deep cuts or tax increases.
It is too early to tell the impact of this budget proposal. What we know is that it includes a tax hike for low-income families, as the Earned Income Tax Credit (EITC) is reduced. We are sure this is the first of many negative impacts, which we will analyze in-depth once budget documents are made public.
For now, however, it is time to speak up about the EITC.
Connecticut urgently needs a state budget grounded in a commitment to economic growth, equity, and good fiscal governance. The first step to attain these goals is a revenue system that supports working families, instead of seeking to balance the budget on their backs.
The latest budget proposal cuts the EITC. This is a tax credit that benefits low-income working families. In 2015, the Connecticut EITC boosted an estimated 6,600 people over the poverty line and eased poverty for another 99,000. The EITC encourages and rewards working families, promotes positive children's outcomes and partially corrects Connecticut's upside-down tax structure, where low-income households pay a higher proportion of their income in taxes. The newest round of proposed cuts would impose a tax hike on nearly 200,000 Connecticut families who are working hard but not making enough to get by.
The solution to Connecticut’s budget woes should not rely on raising taxes on those who can least afford them. Such decisions might balance the budget this year, but only by putting the very foundation of our prosperity at risk. We need a new approach that makes investing in thriving families, equitable opportunity, and fiscal responsibility a priority. Doing so will require bold action, not raising taxes on the poor.
Call your legislators and tell them we need a budget that moves Connecticut forward toward equitable economic growth, increased opportunity, and sustainable, efficient government. Click here to find your legislator and contact them today. Click here to download our latest brief mapping a path forward for Connecticut using ideas and proposals shared across party lines.
Want More Action Alerts?
As the budget negotiations continue, we will be sending more action alerts to our "Voices from the Capitol" mailing list. Make sure you are subscribed here.
Legislative leaders intend to move quickly in the coming days towards a budget vote. House Democrats and House Republicans are caucusing today; their Senate counterparts will be meeting on Monday. They intend to pass a budget late next week with a broad bipartisan support, perhaps even a veto-proof majority (two-thirds in both chambers). Legislative leaders will meet with the Governor in the coming days and have said they are open to introducing changes in the proposal to avoid a veto, so the proposals are not final yet.
Is this good news? It is hard to say, without knowing much about the full proposal. The budget delay was starting to negatively impact municipal budgets and key services. However, it is too early to tell if the current bill under consideration makes some of the hard choices the state needs to move forward, or if it is little more than a stopgap measure that will force our state to re-live this battle next February.
The Governor's Budget Proposal
Even if legislative leaders intend to pass the budget with a veto-proof majority, yesterday they expressed a willingness to negotiate key details with the Governor before final passage. On Monday, Governor Malloy presented a revised budget proposal that highlights some of his key positions ahead of these talks. You can download our policy brief on the Governor's most recent plan here.
Connecticut Voices for Children is hiring for three new positions to strengthen and expand our research and advocacy work:
Senior Economic and Fiscal Policy Fellow
Lead research and advocacy on state, federal and municipal tax, budget, and economic development work. View job announcement
Fiscal Policy Fellow
Conduct research and advocacy on tax, budget, and fiscal policy work. View job announcement
Educational Equity Policy Fellow
Lead research and advocacy to advance school readiness, early childhood, college and career readiness, and educational equity. View job announcement
Breaking the ACA through regulation
Legislative efforts to repeal the Affordable Care Act (ACA) have largely fizzled, but the healthcare law is still at risk. President Trump announced three measures last week that have the potential to greatly weaken some key pieces of the ACA structure.
- Cost-Sharing Reduction (CSR) payments: this is a provision under the ACA that reimburses insurers for providing discounted premiums to low-income families. Due to a drafting error, the ACA does not explicitly appropriate these funds, leaving the door open for the administration to discontinue them. Due to the structure of the ACA markets and tax credits, however, eliminating the CSR will end up both reducing coverage and increasing the costs borne by the federal government, as higher premiums will both make insurance unaffordable for as many as one million people who do not receive tax credits and increase the tax credit amount from the government for low-income families.
- President Trump also instructed the Department of Health and Human Services to change several ACA regulations that could potentially weaken the individual insurance market. CBPP has more here. It is unclear when the new regulations will be implemented.
- The final executive order made it much easier for employers to opt out of covering contraception. It is unclear how many employers will opt out, particularly given the low cost and high impact of covering contraceptive options. You can read more here.
A possible fix
Not everything is bad news on the ACA front, however. Two key Senators, Lamar Alexander (R-TN) and Patty Murray (D-WA), have reached a tentative agreement to fund the CSR payments, fund outreach programs to promote enrollment, and provide additional flexibility to the states. CBPP´s Bob Greenstein provides an overview here; it is a bipartisan agreement that would make the ACA work better.
Unfortunately, it is unclear whether the agreement has the votes to pass in Congress. Some Republican Senators have already voiced their skepticism. Speaker Paul Ryan and President Trump have also expressed doubts. As it is a bipartisan effort, it still might be able to gather enough support to pass, but it is a long shot.
Save the Date: First for Kids Awards
Thursday November 9, 2017
5:00 p.m. to 7:00 p.m.
Please join us for an evening of music, mingling, and celebration as we honor three outstanding voices for Connecticut’s children.
When: Thursday, November 9, 2017, 5:00 to 7:00 pm
Where: Pond House Café, 1555 Asylum Avenue, West Hartford
The 2017 First for Kids Honorees
- Sharon Langer: Lifetime Achievement Award
- Arielle Levin Becker: Media Voice Award
- Vincent Espino: Youth Voice Award
To register, click here.
What We Are Reading
- Care4Kids Update: Slots Decreasing Rapidly, CAHS Blog.
- Are Efficiency and Equity in School Finance Substitutes or Complements?, Caroline Minter Hoxby, Journal of Economic Perspectives.
- Misdirected Investments: How the Mortgage Interest Deduction Drives Inequality and the Racial Wealth Gap, Institute on Assets and Social Policy (IASP) & National Low Income Housing Coalition.
- Eliminating State and Local Tax Deduction to Pay for Tax Cuts for Wealthy a Bad Deal for Most Americans, CBPP.
- It’s the Economy, Democrats, but Inequality Is Not the Issue, New York Times.