News from Sullivan & LeShane, Inc.

May 7th, 2021

In This Issue:

From Paddi's Desk

CT Agency Corner

Municipal Roundup

From Inside The Golden Dome

Behind the Scenes

This Day in CT History

April showers bring May flowers — and report cards!

College campuses across the state are ready to issue final grades and diplomas for the 2020-2021 school year, and in the coming month high school students will be prepping for final exams and graduation ceremonies.

In Hartford, this past week was for sure the busiest thus far for the House and Senate this session. It’s also been a week filled with citizen rankings, Cato Institute reports, U.S. News state reports and many, many other third party report cards. I thought it might be interesting with Connecticut “on its way back” (according to the Governor and legislature) to take a look at how our state has fared over the past year under some very trying circumstances.

To start off, the Cato Institute just released a report that places Connecticut dead last (#50) for overly burdensome state regulatory atmosphere. YouGov conducted an open pool where they asked Americans to rank the 50 states plus Washington, D.C. from best to worst by having respondents choose the better of two states from a list of head-to-head comparisons. Well, Connecticut came in the middle of the pack with a 51% win percentage in its matchups. Leading the list was Hawaii, Colorado and Virginia. Not too surprising. Interestingly, the District of Columbia came in last with a 35% win rate against its matchups.

A little note to consider: overwhelmingly Americans chose their own home state 77% of the time when it came up in a matchup!

According to the U.S. News State Report, Connecticut ranked 20^th – not bad overall. But if you look deeper into the survey, you’ll see it asked state residents how satisfied they are with state government services and where they thought their state government should focus its priorities—and this is where Connecticut landed.

Using a ranking of 1-50, one being the highest, Connecticut ranked a three in healthcare (quality, access and general public health). In crime and corrections, residents ranked Connecticut a six—based on public safety and enforcement. Education also received a six, which included Higher Education and Pre-K—12. Coming in next, a real drop with a 22 ranking, was the economy— which factored in environment, employment and growth—followed by natural environment with a 28 (air, water quality and pollution).

A bit surprising, eh?

Buried with 45, 48 and 50 rankings was our state’s infrastructure (energy, internet access and transportation) opportunity (affordability, economic opportunity and equality) and fiscal stability (long-term and short term). OOPS!

Not too cool for Connecticut.

But maybe things are looking up? Recently it was reported that more than 27,200 NYC residents chose Connecticut over the hot spots like Westchester, Orange, Duchess and Ulster Counties in New York State during the pandemic. More than 66% of those who chose to relocate made their way to the Connecticut shoreline and hills for respite from the daily barrage of remote working, remote learning and empty streets and shops. Other reports informed us that we have the largest number of out of work residents since the tough days of 2011, with 143,000 residents collecting unemployment.

Forbes’ annual ranking once again put Connecticut at the bottom when it comes to financial and business news. In a news release, Forbes said that the rankings were calculated based on forty metrics spanning six main categories: business costs, labor supply, regulatory environment, economic climate, growth prospects and quality of life.

And once again Connecticut found itself near the very bottom of this list. For the record, Connecticut was ranked No. 43. The only states ranked worse than us were Maine, Vermont, Louisiana, Hawaii, New Mexico, West Virginia and Alaska. The worst rankings were due to high taxes and electrical rates.

So what does this tell us? Governor Lamont needs to hang tough on state spending and taxation if he wants to keep Connecticut moving forward. All indicators seem to say that the state needs to think about keeping up with the Joneses (aka our peer states) so we can keep those who pay the highest taxes here in Connecticut for the foreseeable future—if we want to maintain the quality of life many insist on. Connecticut should also encourage those who are able to make decisions about where they want to live or who are thinking about retirement to continue to call Connecticut home. Wouldn’t it be a shame if the passage of the next two-year budget scared away many of our new and longtime residents?

We are the Land of Steady Habits, but we need to think and act differently if we want to succeed. Let’s see where the legislative leaders and Governor end up on June 9^th.

Budget Jenga Blocks Continue to Shuffle Lead Up to Last Month of Budget Negotiations

Connecticut is in part three of the budget-writing trilogy (Return of the Jedi for Star Wars fans) with the Governor and Legislative Leadership directly negotiating sections of the budget that must be acted on before June 9th.

Here are the biggest Jenga pieces being maneuvered to see what both sides will agree to include:

-Child Tax Credit

Rep. Scanlon who is Co-Chair of the Finance Committee has proposed a $600 refundable tax credit for families the credit would begin to phase out for couples earning more than $200,000 per year. The benefit, which would not be eligible for families make $210,000 a year, is included in the legislative proposal for inclusion but was not in the Governor's original package.

-Increase in Capital Gains Tax

This provision of the budget was also added by the legislature which increase by 2 percentage points the amount state residents would pay the state on capital gains. The surcharge, which higher federal adjusted gross incomes beginning at income levels of $500,000 for single filers, has already been opposed by Governor Lamont who has stated that he would veto this version of the budget but especially with this provision in the bill. Things certainly can change but it appears that for now this section will be one of the most hotly contested portions of the budget.

-Allowing Restaurants to Keep Portion of Sales Tax

This proposed relief enables restaurants, hotels and bars to keep 13.6% of the revenue generated from the 7.35% sales tax collected during fiscal year 2022. This is estimated to be a very sizeable amount but the way the section is drafted it would sunset on June 30, 2022. This was also not included in the Governor's budget and historically past administrations have been very hesitant to make sures to stable sources of income like the sales tax.

In addition to these sections here are other sections of the bill likely to be included:

— Increases the state earned income tax credit from 23% to 40% of the federal credit, ultimately to be funded through revenue from the yet-to-be approved legalized recreational cannabis program.

— Exempts breastfeeding supplies from the 6.35% state sales and use tax.

— Imposes a highway use tax beginning Jan. 1, 2023 on generally tractor trailer trucks that ranges from $0.025 to $0.175 per mile, depending on the gross weight.

— Imposes a new “consumption tax” on the sales tax for those who make over $500,000.

— Imposes a new gross revenue tax on digital advertising services.

— Makes permanent a 10% surcharge on the state’s corporate business tax, while eliminates a 6% tax on ambulatory surgical centers on gross receipts and imposes the state’s 6.35% sales tax on services instead.

The department of Labor recently released data on teacher salaries and within that data, several groups have analyzed and ranked teacher salary averages by state. In CT, teacher salaries average at about $79,000 versus the national average of about $65,000 per year. CT has the title of the highest average salary for teachers in the country. The study also compares those salaries and local education spending to outcomes like graduation rates. On this, CT’s 80.8% graduation falls behind the national average of 85.3%. What does all this mean? It could mean that there still remains a correlation of school spending to outcomes, but maybe not as strong of a correlation that many would suspect or that salaries may not be the leading factor to outcomes. Either way, this data and its subsequent release will have many local boards of educations and boards of finance scrambling to find out more about their own spending vs outcomes and that conversation is always a healthy one.

In other news, this week New Haven’s Tweed Airport announced that it would be undertaking a massive $100 million expansion which would include a new airline, new terminal and a longer runway, which would make way for more flights to more destinations. It is no secret to those in Greater New Haven that Tweed has long been in need of upgrades. The new airline that would be providing services at Tweed is Avelo Airlines, which said that they will offer more direct flights to a variety of places throughout the country.

Last Month of Session Won't Be for the Faint of 'Heart'

Messages of strength, unity, and love appeared in the form of giant wooden hearts outside of the State Capitol building this week. These hearts, which were modeled after First Lady Dr. Jill Biden's Valentine's Day display on the White House lawn, were installed by a local group as part of an effort to thank essential workers for their service to the community during the pandemic, beginning with National Nurses Day which was on Thursday.

But also, they will serve as unavoidable signs to legislators as they enter the building each day for the last month of the session.

These weeks are often the most intense, bringing with them long hours and hard negotiations. As we previously reported, many of the bills that have been acted on by the House and Senate so far this session were ones that had broad based support, but many more controversial topics still remain to be voted on. Perhaps these messages of unity will help to set the tone as leaders enter into budget meetings and reconcile the differences in their competing budget proposals.

Next week, conversations regarding Governor Lamont's proposal for use of the federal American Rescue Plan Act funds will begin to heat up as the Appropriations Committee prepares for its response to that plan. Other major outstanding topics being negotiated include, but are not limited to, the effort to legalize recreational cannabis, sports betting, expansion of affordable housing, health care reform, and whether or not to renew the soon to expire executive authority that the Governor holds related to pandemic response.

For more about the capitol hearts campaign, you can read this article in the Hartford Courant here.

Freshman Legislator Profile: Dr. Jaime Foster (D-Ellington)

Newly elected State Representative Dr. Jaime Foster has jumped right in to her new work, matching her skill set as a research scientist with a background in health and nutrition policy with her legislative goals. In addition to her education and her professional experience, she has several years of experience serving on local boards and commissions in Ellington.

She's been able to see several of her priorities move through the committee process and this week, brought out a bill on the floor of the House for the first time. That bill, HB 6229, would require institutions of higher education to study and address food insecurity at college campuses, a topic that she's dedicated many years to working on. During the floor debate, she stressed the importance of making sure that students have access to resources that they may not know are available to them, like the federal government's SNAP benefits.

Dr. Foster is a resident of Ellington, and her district also covers the town of East Windsor. She is a member of the Public Health, Children's, and Energy & Technology committees. Out of these three, she shared that her assignment to Energy & Technology has had the steepest learning curve and she hopes to spend some time in the off session mapping out how the different actors in the energy policy world link up. Dr. Foster has also played a lead role in discussions on many of the topics in the Public Health committee this session, like in the efforts to ban flavored tobacco products.

May 7th: Edward Land's Developing Story

For more than a century after practical photography was invented in 1839, all photographers had to wait to see the pictures they had taken until the images had gone through a lengthy, chemical developing process. The man who was to change all that, Edward Land, was born in Bridgeport today in 1909. Land, a self-taught inventor and co-founder of Polaroid, revolutionized the way the world experienced photography.

After graduating from the Norwich Free Academy in southeastern Connecticut (which later named their library after this famous alumnus), Land attended Harvard University for one year. He then dropped out to pursue what he described as “more practical” applications of physics and chemistry. Long fascinated by the uses of polarized light, Land and his former professor George Wheelwright III established Land-Wheelwright laboratories in Boston where they manufactured polarized film and lenses.

In 1937, Land and Wheelwright changed the name of their venture to Polaroid. During World War II, Polaroid designed and manufactured several types of specialty lenses for the U.S. military, including polarized sunglasses, ski goggles, dark-vision goggles, and stereoscopic (3-D) lenses. After the war, Land continued serving as a scientific advisor to the federal government, and helped develop the cameras used in the Cold War-era U-2 aerial surveillance system.

Here is a link to the full a r ticle - Provided by CT Humanities Council.

Sullivan & LeShane, Inc.