Connecticut Voices for Children Announcements

Two Corporate Tax Loopholes, Two Commonsense Fixes

There are two large, but simple to fix loopholes in the state corporation business tax. As this brief fact sheet outlines, two commonsense reforms -- mandatory combined reporting and the throwback rule -- would close these loopholes, as well as improve fairness towards small businesses, stop rewarding intentional tax avoidance, and generate needed revenues.

Addition through Subtraction: Are Rising Test Scores in Connecticut School Districts Related to the Exclusion of Students with Disabilities?

This report finds that the exclusion of thousands of students with disabilities from reported Connecticut Mastery Test results has distorted reported trends in test scores. Following test scores from year to year in the same grade, the study finds that statewide improvements in standard Connecticut Mastery Test (CMT) scores reported by the Connecticut State Department of Education (SDE) between 2008 and 2009 -- the period of the largest reported gains -- were largely the result of the exclusion of students with disabilities from these standard test results, rather than overall improvements in performance. For example, 84% of the reported improvement in 4th grade math proficiency between 2008 and 2009 and 69% of the improvement in 8th grade reading proficiency could be attributed to the exclusion of these students. Much of the reported improvements in later years could also be attributed to this exclusion, though there were some modest overall gains as well.

In 2009, state and federal policy changes enabled school districts to offer a modified assessment (MAS) to students with disabilities that the districts determined would not have passed the CMT in math and/or reading. As a result of these policy changes, the share of students taking the regular CMT declined substantially. Prior to 2009, students who did not reach the proficient level on the CMT because of their disabilities were included in statewide CMT results. In 2009, thousands of low-scoring students were assigned to take the MAS test instead of the standard CMT, and these students were not included in the CMT results. Thus, CMT scores reported by the State Department of Education appeared to improve in large part because these low-scoring students were no longer included in the calculations.

Maintaining Sibling Contacts for Youth in Foster Care

Connecticut's Unemployment Insurance Trust Fund: A Splintering Work Support

Flaws in the funding mechanism for Connecticuts unemployment insurance trust fund and in its standard for adequate funding have left the state unprepared for economic recessions and contributed to the insolvency of the trust fund. As Connecticuts unemployment insurance trust fund faced increased demand during the economic recession, it began paying out benefits at a rate that far exceeded the rate at which employers were paying into the system, leading the State Department of Labor to declare the fund insolvent in October 2009. Since then, the state has had to borrow over $800 million from the federal government just to stay current on legally-obligated unemployment payments. Interest costs from this debt result in higher charges for employers.The analysis finds:

Connecticuts failure to keep its employer-paid unemployment taxes in step with growing wages has contributed to the insolvency of the states trust fund.
Connecticuts standard for an adequate unemployment trust fund balance leaves the state unprepared for economic recessions.
Connecticuts insolvency problem is not the result of its unemployment benefit levels, which are among the lowest in the country when compared to average wages.
Unemployment taxes in the state are in the middle of the pack nationally.

To avoid future funding problems in the unemployment insurance system, the report recommends increasing employer contributions to better match the growth in wages and adopting a higher standard for the adequacy of the trust fund balance.

Handouts from State Budget Forum

Thanks to everyone in the large crowd who turned out for our state budget forum at the Capitol on January 12! Watch streaming video of the forum via the CT Network. Below are handouts from the forum.

Taking Stock: Four Decades of State Revenues, Expenditures, and Deficits. Report by Wade Gibson, Senior Fellow, Connecticut Voices for Children
How Will Federal Budget Changes Affect Connecticut? PowerPoint presentation by Joan Huffer, Director, Federal Budget Initiative, Center on Budget Policy Priorities
Text of Congresswoman Rosa DeLauros speech on Financing Infrastructure in Tough Times
State of Connecticut Preventative Care Initiatives: HEP and PCMH Pilot. PowerPoint presentation by Kevin Lembo, State Comptroller
Making Sense of the Rankings: Where Connecticut Stands on Business Taxes. Handout from Connecticut Voices for Children.
Are CT Business Tax Credits Creating Jobs? Would We Know if They Weren't? Handout from Connecticut Voices for Children.
After 2011 Tax Reforms, Connecticut's Wealthy Still Pay Smallest Share of Income in State and Local Taxes. Handout from Connecticut Voices for Children.
Forum Agenda

CT Voices for Children's work on tax and budget issues is supported by the Melville Charitable Trust, Stoneman Family Foundation, and Connecticut Health Foundation.

Taking Stock: Four Decades of State Revenues, Expenditures, and Deficits

This overview of state budget trends contradicts some conventional views and concerns about taxes and spending in Connecticut.

During the last recession, Connecticut policymakers closed a larger share of the deficit through spending cuts and smaller share through revenue increases than during previous recessions. In response to the latest recession (Fiscal Years 2009 to 2013), Connecticut policymakers closed 37% of the state budget deficit through revenue increases, compared to 42% in the previous recession (Fiscal Years 2002 to 2003) and 44% during Fiscal Years 1989 to 1992.
State spending has remained stable over the last two decades, after an increase in the late 1980s and early 1990s. Spending as a share of personal income was about 2% lower in 2010 than in 1995.
Over the last 20 years, state revenues from corporation business taxes and sales taxes have fallen dramatically as a share of personal income. Corporation business taxes fell 73% and sales taxes 44% as a proportion of personal income between 1990 and 2010. This decline was brought about by corporate tax cuts, expanded loopholes, and tax avoidance by businesses. The decline of sales tax revenues was due to to a shift towards an economy based increasingly on services, which are usually not subject to sales taxes, rather than goods, which are taxed.
Although middle-income and low-income Connecticut residents pay a larger share of their income in state and local taxes than the wealthiest residents, the report finds that recent state tax reforms have improved the progressivity of the tax system. This change was due the passage of a state earned income tax credit (EITC) for working families and adoption of more progressive income tax rates for wealthier residents.

Making Sense of the Rankings: Where Connecticut Stands on Business Taxes

This review of recent national rankings of state business taxes finds that Connecticut has low business taxes, generous subsidies with few strings attached, and considerable tax avoidance by major corporations:

Connecticut is home the some of the country's biggest tax avoiders General Electric and Traveler's according to an analysis by the Institute on Taxation and Economic Policy and Citizens for Tax Justice of state and local taxes paid by Fortune 500 companies.
Connecticut ranks poorly 36th in the Nation in a study by Good Jobs First on states' accountability for creating high-quality jobs through corporate subsidies.
Connecticut ranks as the lowest-tax state in America for businesses, according to the Council on State Taxation (COST), a trade association of large corporations.

Census Estimates for Connecticut Cities and Towns, 2006-2010