State seeks boom in budget bust
Published 12:00 am, Saturday, October 7, 2017
HARTFORD — Statewide highway tolls could pump as much as $900 million a year into state coffers, and legalizing weed more than $100 million.
Building a new casino in Bridgeport could net $316 million year.
That’s over $1.3 billion annually — money that could plug deficits, fix roads and bridges and help school districts and municipalities.
But as lawmakers struggle to cobble together a new state budget, close billion dollar deficits and end Connecticut’s cycle of boom to bust budgeting, none of those future money-generating options are on the table.
State Rep. Chris Rosario, D-Bridgeport, said colleagues who serve in legislatures in Massachusetts and Rhode Island are scratching their heads over Connecticut’s choices.
“They ask me ‘why are you leaving that money on the table?’ — tolls, marijuana and casinos,” Rosario said. “They say that’s crazy. I’m in favor of all three.”
The General Assembly’s Democratic majority’s leaders acknowledged all three revenue options could provide stable sources of money over the long term — if the votes can be found for passage. But they also said the revenue would not begin flowing for several years so it can’t help solve the immediate budget stalemate.
“I’m open minded on this stuff,” said House Majority Leader Matt Ritter, D-Hartford, adding that at the moment “we don’t have the votes in the General Assembly.”
Kelly Donnelly, a spokeswoman for Gov. Dannel P. Malloy, said the potential revenue sources will probably be on the table next year.
“I think it would stand to reason that many of these deliberative discussions will be taken up again during the next regular session,” Donnelly said. “In addition, there is a set of larger policy challenges and questions unique to each of these three issues which would need to be worked out first.”
Traditional economic development could provide revenue to help eliminate future deficits and offset stagnant tax revenue, but the state has been losing corporate anchors and is not luring replacements.
And when it comes to taxes, Kiplinger released a report Friday that ranked Connecticut as the 9th least tax-friendly state in the U.S. Based in Washington, D.C., the publishing company releases annual reports on income taxes, sales taxes, gas taxes and so-called “sin” taxes on alcohol and tobacco. It publishes business forecasts and personal finance advice.
With 169 towns and cities now clamoring for state dollars, pensions and rising employee costs draining state coffers and little regional cost sharing, Connecticut is at a crossroads.
And as the budget stalemate has shown, there are no easy answers.
Weed is now a big business across the country and Colorado and other states are raking in billions in annual revenue from taxes levied on legal recreational marijuana.
Massachusetts and Maine voters last year legalized pot, and sales are expected to begin next year. Rhode Island lawmakers recently voted to study legalizing weed. In all, eight states allow the sale of recreational pot and 21 allow medical marijuana.
Revenue estimates from taxing recreational pot in Connecticut run as high as $180 million a year. Other projections place the take at between $45.4 million and $104.6 million a year.
But numerous attempts to authorize recreational marijuana have failed in the General Assembly. Ritter said tolls currently have a better chance of passing than legal marijuana.
“With weed, there is a lot of pushback,” Ritter said.
Senate Majority Leader Bob Duff, D-Norwalk, said legal weed is not something that can be “slammed into a budget” at the last minute.
“It has to be done carefully with a look at the pitfalls and proper protections for children,” Duff said. “Before you legalize it you need a plan in place that makes sense.”
Rosario said the resistance to legal weed, despite polls that show a solid majority of residents are in favor, is rooted in fear of losing the next year’s election. “If you do your job and maximize revenue, you will be fine next year,” he said.
State Sen. Toni Boucher, R-Wilton, said legal marijuana is the last thing the state needs.
“Massachusetts is pushing for job development,” Boucher said. “The rest is ancillary. We need to cut regulations and licensing costs and do something about collective bargaining. There are many things that can be done.”
Revenue projections for statewide electronic tolling in Connecticut vary, with estimates as high as $900 million a year. A study commissioned by the state ranged from $62 billion over 25 years to $5 billion if only $2 border tolls were established.
The Port Authority of New York and New Jersey brought in $1.9 billion in toll revenue last year; Pennsylvania $1 billion; New Jersey $1.5 billion; and Rhode Island $20 million, a recent report shows.
Tolls on Connecticut’s highways have been discussed for years but legislation consistently stalled in the General Assembly. Tolls came the closest to a full vote last month when the Legislature’s Democratic majority included a new Connecticut Transit Authority with authority to implement tolling in its proposed state budget.
But that budget went down in flames after eight Democrats in the House and Senate defected and voted for a Republican budget, which was later vetoed by Gov. Dannel P. Malloy.
State Sen. Scott Frantz, R-Greenwich, said he suspects Democrat will propose tolls, setting up another battle.
“[Democrats] endorsed the transit authority,” Frantz said. “But I’m against tolls.”
Boucher added “making Connecticut a gaming and drug state, I think that’s a net negative.”
MGM Grand’s proposal to build a $600 million waterfront casino in Bridgeport — and the over 7,000 permanent and construction jobs that come with it — represents another long term revenue source for the state.
The company is promising to pay the state $316 million annually, $8 million a year to Bridgeport and build a new employment training center in New Haven. A one-time $50 million gambling license fee would be paid to the state.
But the proposal comes with a serious problem: it would violate the existing gambling compact with the state’s two Indian tribes.
If a Bridgeport casino is authorized, the $260 million in annual payments from the Foxwoods and the Mohegan Sun casino resorts would end, tribal leaders warn. MGM claims the new Bridgeport casino would more than make up for the lost tribal money.
“I’m not opposed, it’s an option,” Ritter said of a Bridgeport casino. “But you have to figure out the compact. Is MGM subsidizing the entire compact? I have not seen that.”
Duff said lawmakers must first pass a new two-year budget before considering complicated casino legislation with long term financial and legal implications.
“Once you make a deal with MGM, you trade off the money with the tribes,” Duff said, adding it’s unclear how much the company is offering to pay.
Frantz said he opposes expanding gambling regardless of where it’s placed.
“It’s a regressive tax,” Frantz said. “I’d rather see an amusement park or something else there.”