Income Tax Increase Proposal Aims to Fund Education

REGIONAL - While increasing the state's income tax to put more money into education sounds simple enough, such a move may not benefit all towns.

Republican Governor M. Jodi Rell estimates the proposal would place $3.4 million in education over five years calling it the "single largest investment in education in state history."

"This plan will ensure that Connecticut's schools are able to meet the needs of our children from the pre-school level all the way up to the university level," Rell said.

While Rell's plan would increase funding to the education cost sharing, ECS, grant, which provides funds to public schools, it would not change the formula.
Financing for the plan would be derived from a 0.50 percent across-the-board increase in the state income tax phased in over two years.

The state income tax was first created by Governor Lowell Weicker in 1991 and was last increased in 2003 from 4.5 percent to 5 percent.

Rell's plan would mean taxpayers would be paying 5.50 percent in 2008.

"Every town will benefit, all communities will get at least a 3 percent increase," Rell said.

A town by town analysis on the governor's website confirms this fact.

While that might be true, the additional amount of taxes residents would pay in each town could offset the additional state aid.

Yankee Institute for Public Policy, a nonpartisan educational and research organization, concluded that 85 percent of towns would pay more than they would
receive in state aid, said Executive Director Lewis Andrews.

The conclusion does not consider non-resident income and is based on the current ECS formula.

The analysis shows that, Chester taxpayers would be forced to pay one cent more for every additional income tax dollar they pay, one of six towns that would lose out in the end.

Lyme taxpayers would see a mere 3 cents back for every additional dollar they pay while Deep River would receive 4 cents back.

Essex and Old Lyme would each see 8 cents back.

The biggest winners in the lower Connecticut River Valley area are Old Saybrook and Clinton each with an 11 cent return and Westbrook with a 13 cent return.
In comparison, Bridgeport taxpayers would receive $3.52 for each additional dollar they pay and Waterbury would receive $2.74 on the dollar.

In the 65-town second Congressional District which includes most of the eastern half of the state, only thirteen towns would receive more money in state aid than what they would pay in additional income tax.

Andrews believes the legislature should examine the cost-effectiveness of the education dollar pointing to D. Dowd Muska's article "How Cost-Effective Is Your School District."

The article compared per-pupil expenses with Connecticut Mastery Test results and concluded that the Connecticut district with the best score spent $71.42 per pupil while the district with the worst score spent $402.47 per pupil.

Additionally, Andrews said he does not support increasing taxes in Connecticut, which is only one of three states experiencing a population net decrease among young people because of high taxes.

Opposing the governor's proposal for the income tax increase is Democrat State Representative Brian O'Connor, who represents Clinton, Killingworth, and the inland section of Westbrook, in the 35th district.

"Under the current proposal, a lot of towns lose out," O'Connor said, adding that the current ECS formula is unfair to small communities like the ones he represents since it is heavily weighted by a town's wealth factor.

Republican State Representative Marilyn Giuliano, who represents the 23rd district which includes Lyme, Old Lyme, Old Saybrook, and coastal Westbrook, also expressed her opposition to the increase.

While Giuliano said she has supported Rell's transportation, environmental, and job creation proposals, she does not support this proposal.

"The citizens are already greatly taxed," Giuliano said, adding that an income tax increase would hurt those on fixed incomes and young people, both of which are struggling to make ends meet in Connecticut.

Giuliano said current educational spending should be examined to make it more cost-effective.

Democratic Representative James Spallone from the 36th district had a different take on the issue.

Spallone, who represents Chester, Deep River, Essex, and Haddam, said he would support an income tax increase, based on one's ability to pay, as long as it would provide property tax relief.

Rell's proposal "begins serious conversation on shifting the burden on local education to the state realistically," Spallone said.

"Connecticut relies more on the local property tax to pay for local education than any other state," Spallone said, adding that this leads towns to make unwise land use decisions in a "mad scramble to increase the property tax base."

If Rell's proposal becomes a reality, she claims there would be a 50/50 cost sharing for education between the state and municipalities.

Rell counters those questioning the effectiveness of state education dollars stating, "I believe strongly that every dollar dedicated to education will be returned in the form of reduced high school dropout rates, lower teen pregnancy rates, a lower prison population, less spending on social services and a lower unemployment rate."