STATE OF CONNECTICUT A Budget Presentation

1. STATE OF CONNECTICUTA Budget Presentation State Senator Toni BoucherState Representative John FreyMay 3, 2011

2. Legislature’s Budget Process(Governor Proposes, Legislature Decides) • Connecticut Has a Biennial Budget • Governor Submits Budget to Legislature in Odd Numbered Years • Appropriations Committee Holds Hearings for Each State Agency • Subcommittees Review Budget Information • Subcommittees Report to the Appropriations Chairmen • Appropriations Chairmen Prepare Budget Recommendations • Budget Report Submitted to Full Appropriations Committee and Voted Upon • Finance Committee Produces Revenue Estimates and Capital Budget Bills • Appropriations and Finance Bills Submitted to House and Senate • Alternative Budgets May Be Presented by Minority Party • Legislative Leaders and Governor Negotiate Budget • House and Senate Debate and Adopt • Governor’s Signature or Veto (Returned to Legislature) 1

3. State Government Has Grown Too Large Connecticut’s Population vs. Real State Government Expenditures (Source OFA & Census) 2

4. State Government Has Grown Too Large Connecticut’s Employment Growth vs. State Employment Growth (Source U.S. Census Bureau& CT Department of Labor) 3

5. Budget Deficit ProjectionsFY 2011- FY 2013 General Fund (Source OPM) 4

6. Where Does The Money Come From? FY 2011 Revenue (Source: OFA) 5

7. Where Does Your Money Go? Major Spending Components for FY 2011 (Source: OFA) 6

8. The High Cost of Living and Doing Business in Connecticut • Nation’s highest total state and local taxes ($7,007) per capita • 2nd highest unfunded pension liability ($4,500) per capita • 4th highest state debt ($7,882) per capita • 45 states have fewer health insurance mandates • 2nd highest state gas taxes • Voted Least Business Friendly Legislature by Expansion Management magazine • 5th highest cost of doing business, according to the Milken Institute • 2nd highest electricity cost (after Hawaii) • Last Tax Freedom Day in the nation (May 2) • 9.0% unemployment, higher than the national average • 100,000 jobs lost during the recession Sources where not specified: US Census Bureau, the Internal Revenue Service, CT Dept. of Revenue Services, CT Dept. of Labor, Secretary of the State, The Tax Foundation, Education Sector, Tax Foundation & U.S. Dept. of Energy. 7

9. Closing The Budget Gap:What Makes Up Governor Malloy’s Proposed Solution? FY 2012 (General Fund) (Source: OFA) 8

10. Governor Malloy’s Budget Proposal:Largest Tax Increase In State History • Income tax increase across the board • Reduce property tax credit • Increase sales tax to 6.35% • Increase gas & diesel taxes to 28¢/gallon • Increase taxes on: hotel rooms, cigarettes, alcohol, insurance companies, real estate sales • 20% corporation tax surcharge • Tax corporations for income earned in other states • Expand the death tax • Increase motor vehicle registration fees • Increase driver’s license fee • Create $25 driver’s license renewal fee • Property tax on boats and aircraft • New taxes on: $3.8 billion Revenue Increases • pet grooming • automotive storage • “Amazon tax” • packing and crating • automobile road services and towing • limousine services • labor on small aircraft repair • clothing and footwear under $50 • non-prescription drugs • manicures and pedicures • airport valet parking • cosmetic surgery • yoga • cloth and fabric • luxury goods • hazardous waste removal • car rental • admissions and dues • electricity generation • cabarets • waste-to-energy facilities • hospitals 9

11. The Republican Alternative:The “No Tax Increase” Budget • No Tax Increases. Period. • Reduces spending by $1.5 Billion from the Governor’s plan • Preserve aid to cities and towns at current levels • No borrowing for day-to-day operations • Provides real efficiencies and workforce reductions • Fully restores the property tax credit for homeowners • Redirects Connecticut’s budget toward a more sustainable future 10

12. The “No Tax Increase” BudgetWorkforce Restructuring Real Consolidations of Agencies and Job Functions • Consolidates 36 state agencies into 9, and eliminates 383 government positions • Saves $18.9 million in FY12 and $27.6 million in FY13 • Eliminate 1,380 duplicative managerial positions over the biennium • Increase the ratio of manager-to-workers from 1:6 to 1:12 • Eliminate Vacant Positions • Implement a Hard Hiring Freeze • Eliminate Longevity Payments • Labor Concessions Middle-Management Reductions • Consistent with the recommendations of the Bipartisan Commission on Enhancing Agency Outcomes • Savings of $112 million in FY12 and $138 million in FY13 • Savings of $10.8 million over both years of the biennium • Per the Governor’s plan, $2 billion in savings over two years 11

13. The “No Tax Increase” BudgetCommon Sense Reforms • Mandate Relief/Local Options • Binding arbitration reform • Raise threshold for prevailing wage requirements • Eliminate Race to the Top requirements • Delay in-school suspension requirements • Limit unemployment benefits for part-time workers • Option to raise cap on municipal fines to $250 • Eliminate or suspend teacher in-service training • Optional delay of conservation & development plans • Optional delay of revaluation • Eliminate bicycle access mandate • Permit red light cameras • Privatization • Riverview Hospital • DMV – Registrations • DEP – Parks Maintenance • DOC – Prisoner Health Care • DSS – Program Intake & Applications • Bradley International Airport 12

14. Governor Malloy’s Budget February 2011 Appropriations &Finance Committees Final Budget April 2011 Republican Alternative Budget April 2011 13

15. Who Pays Connecticut’s Individual Income Tax? 6.8% of filers pay 50.7% of income taxes (Source: Dept. of Revenue Services) 14

16. Questions?Please Contact Us State Senator Toni Boucher Legislative Office BuildingRoom 3400Hartford, CT 06106800-842-1421Toni.Boucher@cga.ct.govwww.SenatorBoucher.com State Representative John H. Frey Legislative Office BuildingRoom 4200Hartford, CT 06106800-842-1423John.Frey@housegop.ct.govwww.RepFrey.com 15