From Connecticut to Wisconsin to Florida, States Try Creative Ways to Balance Budgets

Mar. 2, 2011 — -- From Connecticut to Wisconsin, states across the country are trying to fill budget gaps with new taxes and cuts in spending. It won't be easy. They're trying to be creative.

In Connecticut, Gov. Dan Malloy is even going after coupon clippers. As part of $1.5 billion in new taxes in Connecticut, Malloy proposes a sales tax on the original price of something -- never mind whether you get a big discount when you buy it.

"Working class people rely on things like coupons to generate savings," said Larry Dorman, spokesman for the Connecticut State Employee Bargaining Agent Coalition, which objects to the idea.

Dorman said the coupon tax and the governor's other budget proposals "hit the middle class disproportionately."

He said he is also concerned about the possible repeal of a $500 property tax credit and an increase in the income tax on middle-income wage earners.

"When you factor those proposals together, it's very unfair relative of what is being asked of corporations and the wealthy," Dorman said.

Ben Barnes, Secretary of the Office of Policy and Management, Connecticut's budget office, said that the taxes were not preferred solutions to balance the budget. He said they were painful but necessary features of a budget proposal.

"Every individual tax is an unattractive option. I'm going to acknowledge that," said Barnes. "Whether it's this tax or any other, we have to consider it with the overall budget package."

Barnes said Gov. Malloy's budget proposal was a "good mix of revenue, spending cuts and concessions from state employees" to balance the budget.

"From my perspective, it's been a number of years since we had an honestly balanced budget," said Barnes, who added that this year's budget had a deficit and was balanced though borrowed money. "We're trying to clean up a significant mess that we've inherited."

Dorman said the state employees union has been "constructively engaged" with the governor and "hopes to continue that process."

"This isn't Chris Christie or Scott Walker," said Dorman, referring to the governors of New Jersey and Wisconsin who have played tough with labor unions. "So there's some reason for optimism at this early stage."

Many states are feeling the pinch and getting creative to find financial solutions. In January, Illinois approved an increase in the sales tax and corporate tax rates, to the dismay of businesses there.

From Wisconsin to Florida, States Struggle With Budget Deficits

Jimmy Patronis, a Florida state legislator, said some companies in Illinois have expressed interest in moving south.

"We have been very frugal with how we've been doing business," said Patronis. "The cost of doing business here is very reasonable. It has made us a little bit of a safe haven."

But Florida has a budget deficit of its own. Florida's state legislature will begin to try to fill a $3 billion budget shortfall when it convenes on Mar. 8. Its spring lawmaking session will last 60 days.

Patronis, in his fifth year as a representative of Panama City, said Florida will have to make a number of tough decisions to constitutionally balance the budget.

"This will be the most challenging budget year I've had since I was elected," said Patronis.

Still, Patronis said he is grateful that he is in Florida with has managed to have a growing population, "excellent economy," and no state income tax.

"I'm glad to be in Florida and not other states," said Patronis, who said he is eager to see how the Republican supermajority will work this session with a Republican governor, Rick Scott.

In February, Scott rejected $2.4 billion in federal stimulus money for a $2.7 billion high-speed rail line between Tampa and Orlando. He "angered Florida pols in both parties," according to an editorial in Time Magazine.

Patronis said as previous stimulus dollars have thinned, the lukewarm economy has put many states are in a budget crunch.

"We had federal dollars come in that helped us fix budget shortfalls," Patronis said. "As the other 49 states had fears, I know we had problems too. The reality sets in that if we don't take the money, somebody is going to get our share and we're going to have to pay for it as taxpayers."

He said some states became addicted to stimulus dollars and for many regions stimulus dollars were not the "savior" they thought it would be.

"Like an addict on drugs, we have to go through withdrawal to make tough decisions to constitutionally balance the budget," Patronis said. "We're hoping our economy bounces back. The economy has not rebounded as the way we wanted it too. Whether it's a Republican or Democrat solution, the taxpayers want some relief."