Budget Challenges Facing Connecticut

Back • Publication Date: April 4th, 2012


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Connecticut has a revenue problem.  Recent non-partisan budget forecasts confirm what Connecticut families already know: the Great Recession is not really over. Personal incomes, business revenues, and as a result, Connecticut’s tax receipts, still lag. Adjusted for inflation, state tax revenues are lower today than they were five years ago, although our needs have continued to grow.

Before the recession, state taxes had held steady for almost two decades as a share of personal income, and spending had held steady as well. What changed in 2008 and 2009 were revenues: they fell through the floor, by billions of dollars per year. They are now recovering, but not as quickly as projected. Further deficits loom, of a billion dollars or more over the next two-year budget cycle.

During this recession, we’ve taxed less and cut more.  Throughout the recent downturn, Connecticut has pursued an unbalanced approach to closing the gap between citizens’ needs and the state’s resources. We have cut essential public services as deeply as any time in a generation, but have used new revenues less than in the last two recessions. This brief discusses the need to take a balanced approach to the budget deficit that includes revenues to ensure our children, and our state, are equipped to succeed in the future.