August 21, 2003 By CHRISTOPHER KEATING, Capitol Bureau Chief
Hartford
Courant
Gov. John G. Rowland signed the final four bills Wednesday to enact the
new $13.5 billion state budget, but he said that simply passing legislation
will not provide the magic bullet to end the state's ongoing fiscal woes.
With the economy still sluggish and the state's unemployment rate spiking
unexpectedly in July to 5.2 percent, Rowland said lawmakers would need to
tinker with the two-year budget again when the next regular session convenes in
February 2004.
"The bad news is that the economic struggles are still very much ahead,
and I don't expect revenues to jettison up and save us over the next 24
months," Rowland told reporters at the state Capitol. "In my opinion,
we're not in a position where we're on the train back to recovery. I think that
our revenues will continue to be flat."
The state's budget problems have been caused, in part, by large drops on Wall
Street since the peak levels in 2000 and a subsequent drop in income tax
payments in Fairfield County that far exceeded any other county in the state.
After a series of 16-hour days and bitter partisan wrangling that stretched for
months, legislators are relieved that nearly all of the fiscal work is
complete. As a result, the formerly tension-filled Capitol has turned into a
ghost town this week as legislators and staff members have taken long-delayed
vacations.
While lawmakers are scheduled to debate the annual bond package of construction
projects in a special session in early September, Rowland said he would not be
surprised if the vote was postponed until February.
The reason, he said, is that the legislature has essentially been in session
for the past eight months, and "there's been 30 seconds of discussion
about the bond package," Rowland said.
"If it slips to February, it's not the end of the world," Rowland
said. "It doesn't seem to be all that important to the legislators.
Otherwise, they would have done the bond package."
The all-Democratic New Haven delegation and a city lobbyist have been working
behind the scenes to place items into the bond package, but Rowland said none
of that has come to fruition. New Haven has ambitious plans for downtown
redevelopment, but they are nothing more than architectural drawings at the
moment.
"The whole thing about New Haven - that's on the back of an
envelope," Rowland said. "There's been no proposal. There's been no
hearings. There's no discussion. There's nothing on paper."
On another budget issue, Rowland said he agreed with the 11th-hour changes in
the highly technical area of corporate tax loopholes that were approved by the
legislature last week. Lawmakers voted to increase corporate taxes by $90 million
over the past fiscal year, including a 25 percent surcharge on the corporate
profits tax for the 2004 calendar year. The increases include about $40 million
in additional funding from closing tax loopholes, including increasing the
"preference tax" that corporations must pay if they use the
single-reporting or unitary method of filing their corporate taxes.
Currently, about 1,200 Connecticut corporations pay a fee of $25,000, and now
the fee will jump to $250,000 for corporations that continue to choose that
method of tax reporting, officials said. The complicated changes were enacted
after detailed discussions with corporate tax lawyers.
"We truly wanted to close loopholes," Rowland said. "I think we
did accomplish that goal with the final bill."