Winning With Tax Reform: The Connecticut Story

In October of 1991, 40,000 furious citizens massed

in Hartford at the State Capitol, protesting Connecticut's new income tax,

cursing and spitting on Governor Lowell Weicker, and threatening legislators

with political extinction. One month later, Democrats in New Jersey were routed

by an irate electorate in retribution for the passage of changes in the state's

tax structure coupled with increased aid to education. Republicans took control

of both houses of the New Jersey legislature by veto-proof margins.

Both events reflected the crippling dilemma faced by progressives and Democrats

in recent years: increased revenues and fair tax structures are necessary to

improve the lives of people and communities and to demonstrate that government

can deliver; and yet to touch the issue of taxes (other than to urge relief for

the middle class) is political suicide. In state after state, severe cutbacks,

scapegoating of state employees, shortchanging of cities and towns, and the

general stifling of any new programmatic thinking have all been the result of

the inability of our political culture to deal with the question of taxes.

But the last two years in Connecticut have shown that it is possible to enact

progressive tax reform, avoid shortsighted cutbacks--and win politically. After

months of fierce struggle, in 1991 the Connecticut General Assembly adopted a

sweeping progressive tax reform the first state to do so in fifteen years. And,

this past November, the Democrats retained legislative control of both houses

without losing any ground; fifty-two of fifty-eight legislators who supported

the new personal income tax and ran again were re-elected, overwhelmingly

ratifying tax reform.

Clinton's coattails contributed to Connecticut's stunning refutation of

taxes-equal-suicide equation. But there were other important drivers--the

severity of the state's fiscal crisis, a self-confident, independent governor,

and especially, fifteen years of determined and effective organizing by

Connecticut progressives.



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CONNECTICUT TAXES AND POLITICS

One of Connecticut's mottos is the Land of Steady Habits. For years the state

carried on as a fiscal throwback and as a lingering bastion of machine

Democratic politics. The Democratic Party in the postwar years was shaped, and

presided over, by the legendary John Bailey, who also served as Democratic

National Chair under John Kennedy. For decades Bailey dominated the state

legislature as well as the rest of state politics with an accommodating but

all-powerful hand. The required behavior was go-along and get-along. The

nominating procedures for candidates was (and remains) the most restrictive of

any state in the country, so intra-party challenges were few. Ideologically, the

Democratic Party's operating principle was to hew just far enough right of

center to render the Republican Party irrelevant. Republicans had long fumed

that the business community would not support Republican candidates, since they

never had any complaints about the Democrats.

The Republicans weren't the only ones who fumed. Liberals also felt shut out

and ignored and were kept from challenging through administrative roadblocks and

a well-tended machine. In 1970, for example, Joe Duffy, a liberal anti-war

candidate, won the Democratic primary for U. S. Senate in 1970. But Senator

Thomas Dodd, Chris Dodd's father, was unwilling to accept the defeat and ran as

an independent. He finished third, but siphoned enough votes to throw the

election to the Republican candidate, Lowell P. Weicker, Jr.

In 1971, in this conservative and limiting climate, a state income tax was

first passed. The state had a deficit and the General Assembly was deadlocked.

Well into a special session, and with little warning, no public hearing, and no

organizing, Senate leaders adopted an income tax plan in the wee hours of the

morning. It was deeply flawed as a result of its hasty passage. Leading

newspapers ran scathing editorials, and protests raged. Forty-six days after the

plan was passed, a special session voted to repeal the tax, and it disappeared

as quickly as it had come.

Many lessons might have been learned from the experience, but the lesson the

Democratic Party embraced was: "We don't do income taxes." For years,

this remained the party's fiscal credo. Ella Grasso, governor from 1974 to 1980,

and Bill O'Neill, governor from 1980 to 1990, set the standard for all others by

taking "the Pledge." They vowed, in each election campaign, to oppose

an income tax and to veto one if it reached their desk. This obviously had a

chilling effect on the Democratic discourse about taxes and left Connecticut

with one of the most regressive tax structures of any state. Connecticut was one

of only nine states (alone among major industrial states) without a broad-based

personal income tax. In return, the state had the highest sales tax in the

country in 1990, at 8 percent.

It also had the highest business profits tax in the country, at 13.8 percent,

very high property taxes, and a capital gains, dividend, and interest tax that

topped out at 14 percent. This structure, with its excessive reliance on sales

and property tax, was not just regressive. In addition, the high business taxes

hurt the state's competitiveness. And finally, a system based on corporate

profits and sales revenues is excessively "pro-cyclical," booming in

the good years and crumbling at the first sign of recession, making it

impossible to predict or plan long term. If you were a teacher and Connecticut's

tax structure were a class project, the students would all have been left back.

To their great credit, some Democrats fought for change. Irving Stolberg, who

would subsequently serve as Speaker of the House, was chairman of the Finance

Committee and worked tirelessly for tax reform. Bill Cibes, a liberal

representative from New London, led a hold-out in 1983 against the budget and

for an income tax. In addition, progressive unions, human service advocates, and

other liberal groups formed coalitions for tax reform over the years. They were

invariably stymied by the promise of a gubernatorial veto and the memory of the

1971 fiasco. And so the tax structure never changed.

One other major factor keeping the tax structure intact was the phenomenal

growth of the Connecticut economy in the mid-1980s. Fueled by the Reagan

administration's defense buildup and the real estate boom, employment grew

faster than the national average. Per capita income was the highest in the

country and growing at double-digit annual rates. In the boom years, from

1985-1988, the sales tax grew an average of 18% per year. Corporate tax revenues

jumped almost 20% annually during this period.

All this allowed spending to increase dramatically, especially for education,

senior citizens, health care, prison and road construction, and state

employment, without burdening (or reforming) the revenue stream. Those few who

warned that the end would come and the revenues would not match expenditures

were ignored, and the state barreled ahead.


THE RISE OF PROGRESSIVE POLITICS

In the meantime, a major change was brewing within the Democratic Party.

Connecticut had always had an activist tradition and a liberal wing of the

party. The Connecticut Citizen Action Group (CCAG), founded in 1971 by

Connecticut native Ralph Nader, and originally headed by Toby Moffett, was one

of a number of thriving citizen action organizations that grew in the 1970s. By

the mid-1980s, it had a membership of 100,000. The Caucus of Connecticut

Democrats, founded in 1968 during the McCarthy campaign, kept the liberal flame

alive within the party. In addition, the Connecticut labor movement contained an

unusually large number of progressive unions with a large and active rank and

file, including the Connecticut State Federation of Teachers, District 1199, a

strong Machinists union, and a solid United Auto Workers Region 9A.

These forces came together electorally in 1980 in a coalition called the

Legislative Electoral Action Program (LEAP). Marc Caplan, the former director of

CCAG, founded the coalition with six groups initially and became its director.

LEAP hoped to unify the electoral activities of progressive organizations (and

in some cases prod them into electoral work), focus them in targeted races, and

offer high-quality technical assistance and large numbers of campaign volunteers

to promising progressive candidates. The key progressive union leaders, led by

John Flynn of the UAW, who became LEAP's president, felt enough frustration and

alienation from the Democratic Party that they put their considerable

credibility on the line with the fledgling group. (Today, twelve years later,

under the leadership of Rebecca Doty, LEAP has thirty member organizations and a

record of over 150 electoral victories, and four similar coalitions have been

established in other New England states.)

In its 1980 electoral debut, LEAP took on a few races, mainly in defense of

four key state senators targeted by the local version of NCPAC. All were

reelected. In 1982, Doreen Del Bianco of Waterbury, president of CCAG, won

office in the first concerted LEAP effort to recruit and elect an issue activist

to the legislature.

In 1984, in the Democratic primaries, Lynn Taborsak, the state coordinator of

NOW, and I ran simultaneously in primaries against ten-year incumbent

conservative Democratic leaders. With professionally run, grass-roots campaigns

that became the LEAP hallmark, both of us won upsets, signaling the arrival of a

feisty new wing of the Connecticut Democratic Party. Also in 1984, Reagan swept

the state by a huge margin, and Republicans took control of both houses of the

legislature, sweeping out fifty Democratic incumbents.

Republican control only lasted one term, and in 1986 with a strong showing by

Governor O'Neill, the Democrats retook both houses. This time, LEAP had mounted

strong efforts in thirty races, electing a new crop of twenty-five

issue-oriented activist legislators. Shortly after the election, a Progressive

Legislators Group was founded, with over thirty Democratic House members

participating out of a Democratic caucus of eighty-eight members. Irving

Stolberg was elected Speaker of the House. Over the next few years, Mandatory

Medicare Assignment, a hate crimes reporting and penalty bill, mail-in voter

registration, pro-choice legislation, a gay rights bill, pay equity, steps

toward universal health insurance, full health benefits for state retirees,

family leave, enhanced aid to cities and towns, and many other initiatives

passed with leadership from progressive legislators.

As these initiatives moved forward, the limitations of the tax structure became

increasingly evident. Revenues were unpredictable. Business grumbled. Poor and

middle-income people paid a disproportionate share of the tax burden. And the

overreliance on the property tax made it impossible for the cities (Connecticut

has three of the poorest cities in America amidst its wealth--Hartford, New

Haven, and Bridgeport) to prosper. Tax reform needed to be on the agenda, with

or without the Democratic governor's support.


A POLITICS OF UPHEAVAL

Conservative Democrats in the House resented the progressive gains and

especially disliked the encouragement Speaker Stolberg gave to the progressive

group. So, with active support from the governor's office and from

business-oriented lobbyists, a moderate caucus was formed shortly before the end

of the 1987 session.

In early 1989, as the Democrats in the House prepared to organize themselves,

twenty-three conservative Democrats secretly cut an unprecedented deal with the

Republicans to overthrow Speaker Stolberg and replace him with a popular

conservative Democrat, Representative Richard Balducci. This daring and damaging

coup sent shock waves through the capital, but the initial dismay of

progressives dissipated as Balducci proved to be a fair and accommodating

leader, and progressive legislation continued to be enacted.

Also in 1989, with the economy softening, the Office of Fiscal Analysis

predicted a major revenue shortfall. Several progressive members of the

Progressive Legislators Group who were also members of the Finance Committee,

led by Representatives Geri Langlois and Juan Figueroa, called for a public

hearing on the possibility of an income tax. A bill was prepared, hearings held,

and support grew. On a closed vote in caucus, a bare majority supported an

income tax. But with the certainty of a veto by Governor O'Neill, the idea was

dropped. However, a major tax increase was enacted, raising the sales tax to 8%,

enacting a 20% surcharge on business taxes, and utilizing accounting gimmicks

and one-shot revenues to balance the budget. Eventually, the increases adopted

raised less than half the anticipated revenues.

Largely due to fiscal issues, Governor William O'Neill, hovering at 20 percent

favorable ratings, announced that he would not run again. That left a race with

an unusual field of three candidates. John Rowland, a conservative congressman

from Waterbury and the Republican candidate, took the Pledge and proposed to

balance the budget by deep service cuts and massive layoffs of state employees.

Bruce Morrison, the Democratic candidate, adopted a platform calling for a

voters' non-binding referendum. That position got him through primary day, when

he defeated tax-reform advocate Bill Cibes, but not through the general

election.

The third candidate in the race, Lowell P. Weicker, Jr., had been ousted from

the U.S. Senate after eighteen years by Joseph Lieberman in 1988, largely due to

massive defections of Republican voters and activists who thought him too

liberal. In February of 1990, Weicker announced as an independent, shedding his

ill-fitting Republican clothes. When his turn came to address the income tax,

Weicker said "Everything will be on the table." However, he also said

that passing an income tax in a recession would be "like pouring gasoline

on a fire." He managed to muddle through without being forced to fully

reconcile his positions.

Weicker was elected with 41 percent of the vote to 38 percent for Rowland. The

Democrat Morrison came in third with 21 percent. Weicker became governor without

a clear position on the tax issue and without a single member of his own party

(A Connecticut Party) as a sure ally in the legislature.

Shortly before the legislative session convened in January of 1991, the Office

of Fiscal Analysis released budget projections that showed that on a current

services budget (increases only for inflation and court-mandated or

contractually mandated expenditures), the state would be an astounding $2.7

billion short, out of a total budget of just over $7.5 billion. This was a

shortfall of over 35 percent, by far the worst percentage shortfall of any state

in the country.

Why was Connecticut's fiscal crisis so severe? First, Connecticut's recession

began earlier and ran deeper than almost any other state. Defense cutbacks,

coupled with a collapsed real estate and construction industry and the severe

contractions in insurance and banking, left Connecticut's economy reeling. In

addition, federal cutbacks in state aid since 1981 added up to $1.2 billion less

aid per year. At the same time, state spending increased dramatically, with the

biggest increases coming in education aid to towns, corrections (many new

prisons, many new guards), and in Medicaid. And finally, as noted, the state's

tax structure was tremendously sensitive to shifts in the economy. So while the

revenue stream's natural expansion during the boom years masked the structural

problems, now in 1991 the revenue stream collapsed with the weight of the

recession.

Sales taxes, which had grown so rapidly during the late 1980s, were projected

flat. Corporate taxes, also booming in the 1980s, fell 30 percent in some

quarters, dropping hundreds of millions of dollars below projections. The 1980s

were truly over. In all, the tax structure was to produce $500 million under

projected revenues for 1990-1991, and worse was expected later.

How to balance the 91-92 budget became the forum for a major confrontation over

the state's fiscal future. It also set the stage for a wrenching struggle within

the Democratic Party over how to tax, how to govern, and how to win politically

-- a debate that mirrored the party's fissures at the national level and which

lent even greater intensity to the legislative battle.


THE TAX REFORM BATTLE

The budget debate began in earnest on February 13, 1991 when Governor Weicker

(who had named Bill Cibes his chief budget advisor), in a shocking budget

message, called for $1 billion in cuts, $900 million in borrowing to cover the

past shortfall, and a flat 6 percent personal income tax with a steeply

progressive exemption of $24,000 for a family and $12,000 for a single taxpayer.

Even Weicker's closest supporters were taken aback by his embrace of "the

dreaded income tax." It was vintage Weicker, throwing down a gauntlet. It

was also a decision of great political courage and leadership, which Democratic

governors had not exhibited on this issue in the previous 16 years.

Weicker said his decision to support the tax was "driven by the numbers"--nothing

else would work to balance the budget. He also made it clear that he wanted to

use the revenues to lower business and sales taxes as ways to stimulate the

economy, and in return his plan got real business support. Most observers

believe that his position as third-party governor also made it easier to embrace

a plan with so many political risks for those who voted for it. It cast him as a

central and heroic protagonist, a posture he clearly relished. And he also

clearly aligned himself with the legislature's progressives, who had called for

an income tax for years. He accepted this alignment and much joint strategy was

planned.

What followed was a fierce tug-of-war that lasted eleven months. In support of

tax reform were the Taxpayers Alliance to Serve Connecticut (TASC), a newly

formed grass-roots coalition that included major unions, human service

advocates, church groups, education organizations, and the League of Women

Voters. Its chair was John Olsen, president of the state AFL-CIO; its two key

staffers, Nick Nyhart and Ethan Rome, were from the Connecticut Citizen Action

Group. In addition, the business community supported reform, seeing business tax

increases as the alternative if the income tax failed. Leading newspapers,

especially the Hartford Courant and the New Haven Register, came

out in support of an income tax. A handful of courageous Republican legislators

spoke out, and substantial majorities in the Democratic caucuses in the House

and Senate were solidly behind the effort for the first time. In May 1991, a

timely boost was given when Speaker Balducci, who had opposed an income tax for

seventeen years, reversed his position and supported the income tax proposal.

Arrayed against the tax, and for deeper spending cuts, were the majority of the

Republican caucuses, including the House and Senate leadership, and Republican

Party Chairman Richard Foley. They sensed a 1992 hot political issue, and they

also hated Weicker for deserting them and costing the Republicans their best

shot at the governor's mansion in sixteen years. The Connecticut Taxpayers

Committee, founded by former Senator Tom Scott, the state's most prominent New

Right conservative, organized rallies around the state and did assiduous and

acidic press work.

This group was joined, loudly and proudly, by a group of conservative Democrats

in the House, and, surprisingly, by the two top Democratic Senate leaders. Some

of this was sheer self-protection and political expediency, given the assumed

negative reaction of voters. But they buttressed their position with a strong

political argument about the tax being the "kiss of death" for the

Democratic Party, casting us once again as tax-and-spend liberals. The case was

most forcefully made by then State Democratic Chairman John Droney, who accused

a Democrat who supported the tax of being "Jim Jones asking your colleagues

to drink the income tax Kool-Aid." To these Democrats, the preferred

strategy was to get "Republican fingerprints" on the budget and tax

package, so Democrats could not be attacked from the right.

This fused group of anti-income tax Democrats and Republicans became known as "the

Coalition." Their alternative proposal called for more borrowing, deeper

spending cuts (though not by a lot), and an expansion of the state's 8 percent

sales tax to a large number of new items, mostly necessities, and an increase in

the rate. It also called for other new taxes, including a tax on new mortgages.

They admitted it was an ungainly package, but to them at least it avoided the

income tax. But in fact it was more than ungainly. It was regressive and

insensitive to the needs of the poor. It relied on precisely the same revenue

mix that had failed in the first place. If this plan had passed, the state would

have sunk significantly deeper into deficit.


DEADLOCK, BACKLASH, AND VICTORY

The battle raged through the spring. The regular session adjourned on its

constitutionally mandated date in June, with no budget. We came back into

special session, and June 30, the end of the fiscal year, came and went without

a budget. The coalition did succeed in passing a budget and tax package through

the House and Senate. In fact, they passed three. Each one was vetoed by

Weicker, who insisted that only an "honest budget" with a secure

revenue stream would be signed. And each veto was narrowly sustained, with core

support from progressive legislators.

On July 2, the House passed an income-tax-based budget, only to have it die in

the Senate hours later. The deadlock seemed unbreakable, and the pressure

shifted to the Senate, which was several votes short of passing a tax package.

Intense negotiations continued into August. The legislature felt more and more

pressure to do something, as Connecticut became the last state in the country

not to have a budget in place. Some argued to go ahead and override Weicker's

veto, just to get a budget. But a majority of the Democratic caucus in the House

held firm. The search continued for a few Senators' votes, as the top two

Democrats there still refused to help.

Radio talk shows sizzled. Tempers frayed. Family vacations were ruined. And the

pressure and vituperation from anti-income tax residents grew even more intense.

But the governor and his alliance with progressives held firm. The logjam

started to break when two Republican Senators said they could break from their

party and vote yes. But for one, a wealthy Greenwich stockbroker, the price was

a guarantee that there be no differential rate for unearned income. This meant

that wealthy taxpayers who had paid up to 14 percent in dividend and interest

taxes would now pay at the flat rate of 4.5 percent, which could result in huge

tax windfalls for wealthy taxpayers. Progressive Democrats gagged on this

notion, but the vote--in the absence of Democratic unity--was critical. Finally,

three Democratic Senators, all at once, switched their positions and agreed to

vote yes in return for specific provisions in the bill for business loans, tax

credits for moderate income taxpayers, and a commission to review the entire

structure. On August 22 at 1:00 a.m., the Senate passed the income tax on a tie

vote, with Eunice Groark, Weicker's lieutenant governor, casting the

tie-breaking vote. It passed the House later that afternoon and was immediately

signed by the governor.

But the year was only half over. Almost as soon as

the tax passed, the opposition swung into action. The Republican leadership saw

a great potential for electoral fallout. Tom Scott began to organize a statewide

rally. And calls began to come loudly to reconvene in a special session for "Repeal."

The fertile ground for their efforts was the anger and frustration felt by so

many in Connecticut in this recession. It was, indeed, as many have said, a

terrible time to pass a new tax.

There were other problems. First, for many people the initial withholding

amounts were inflated because it took time to get the system up and running, so

four months of tax withholding were compressed into three. These administrative

errors caused huge public outcries and played into the hands of the opponents.

One irate radio caller who was making $42,000, whose annual tax liability was

$526, said he was being withheld $200 a month--a 400 percent overcharge. Second,

the break given to capital gains, dividends, and interest, dropping from 14

percent to 4.5 percent of regular income, meant that some very wealthy people

(including Lowell Weicker) got a very substantial break. This obvious inequity

allowed the tax opponents (who steadfastly oppose any graduated rate) to charge

that the plan was skewed to the rich and to cast themselves as the defenders of

the middle class.

On October 5, artfully timed for the week after withholding began, the

anti-income tax rally was held at the Capitol. An angry crowd estimated at

30,000 to 40,000 called for political retribution, burned Weicker in effigy, and

spit and cursed at him as he walked through the crowd. Thus began the most

withering political assault I have seen in state politics. Legislators received

up to fifty calls a day. Private offices were picketed. Radio talk show hosts

called legislators at home first thing every morning to lobby them and harass

them. Several were physically threatened, and many removed their legislative

license plates to avoid being noticed. Hit lists were prepared, and "Legislators

Du Jour" were named as if they were a meal to eat.

The sense of mortal risk was confirmed and magnified when New Jersey's

legislative election results came in. A chill wind blew through the state's

politics, and the parallels were seemingly strong. The anti-income tax forces

began making calls to legislators wishing them a "Happy New Jersey."

All in all, it was a pretty grim period, just one year ago.


'REPAIR, DON'T REPEAL'

Yet hardly a single legislator caved in. Legislators continued to receive

support from TASC. In addition, several major unions, led by AFSCME,

commissioned a poll by strategist John Marttila, which showed that people could

support an income tax but were absolutely in shock over the amount of the tax

and inequities in the system. We responded to that anger with the strategy

suggested by Marttila of "repair, don't repeal." Repair meant lowering

taxes on middle class taxpayers. With one stroke, it responded to two of the

most pressing concerns: first and foremost, the absolute tax burden on

recession-ridden middle-class taxpayers; and second, the strong feeling that the

rich were getting away with it again. The plan proposed lowering taxes by

anywhere from $400 to $800. It included a $2,000 dependent exemption, which

responded to the concerns of larger families. For example, a family of four

earning $75,000 would have paid $2,300 instead of over $3,000. The cost of these

reductions was to be borne by the taxpayers earning over $114,000 with a 6.75

percent marginal rate added on income over that level.

Suddenly, the advocates of repeal were on the defensive. The votes were not

there to override a Weicker veto, so if repeal was impossible, why not at least

support a repair that could put $600 into the pockets of those hurt the most by

the tax? If anti-income tax legislators voted against repair, they would raise

questions about their real commitment to the middle class. But if they supported

repair, they would help make the tax more palatable, thus depriving themselves

of a major campaign issue.

As the special session moved forward in December, it was clear that while a

majority would support repeal, they had gotten no closer to the two-thirds veto

override threshold. More and more, the talk turned to repair. On December 9 and

11, the House and Senate voted to repeal the tax. Weicker vetoed the bill hours

later, and his veto was sustained by a 65-84 vote, 17 votes short of two-thirds.

One day later, the TASC ad campaign, "Just Fix It," hit the airwaves

in force. A Hartford Courant poll showed a clear majority wanted the tax

repaired. When the repair amendment was offered, an anti-income tax Democrat

used a parliamentary maneuver not used in Connecticut in twenty years to place a

substitute amendment on top of the repair. When Speaker Balducci ruled the

maneuver out of order and the Republican leader challenged the ruling,

twenty-one anti-income tax Democrats voted with the Republicans to overrule the

Speaker and adjourn. Ironically, it was almost the same twenty Democrats that

had put him in office three years ago who now deserted him.

But while the special session failed to repair the income tax, the bottom line

of the issue as 1991 came to a grueling close was that Connecticut had passed a

major progressive tax reform program, including the income tax that had been

talked about and fought for years.


THE VOTERS' VERDICT, 1992

Stinging from their defeat in the fight, but buoyed by the election results in

New Jersey, the anti-income tax groups and the Republican Party set out to claim

their expected windfall at the polls in 1992. Target lists were drawn. Talk

shows buzzed with threats of revenge. And anti-tax candidates sprang up in

districts all over the state.

At the same time, those of us who supported the tax also went to work in what

we knew would be one of the most difficult election campaigns we could face. The

TASC coalition prepared materials defending the tax and making "repairing"

the tax the focus of many campaigns. In addition, LEAP, the House Democratic

caucus, and PROPAC, a political committee formed by progressive legislators in

the House, pumped substantial money and technical assistance into a number of

key campaigns.

Governor Weicker and his A Connecticut Party also gave many candidates a real

boost. Because of his first-place finish in 1990, A Connecticut Party occupied

Row A on the 1992 November ballot. Back during the fight of 1991, Weicker had

said that for people who "stood shoulder to shoulder with me in this fight,

I'll stand the same way with you when election time comes around." Weicker

kept his word, and A Connecticut Party endorsed 85 Democrats, all for the income

tax, which allowed them to appear twice on the ballot, in Row A and Row C.

Weicker also helped pro-income tax candidates by announcing grants and new jobs

initiatives in selected districts. Several businesses announced plans to stay

and expand in Connecticut.

Another critical factor that helped was the announcement in early July that the

1991-92 budget was balanced, and in fact in a slightly surplus position, thanks

to the income tax and the spending reforms enacted by the General Assembly in

1991. Put simply, the tax worked. It ended five straight end-of-year deficits

and showed that the tax was indeed helping to stabilize the economy. That

argument was a crucial one, made in districts all across the state from that day

forward.

The first key test came in the September primaries, where in a dozen races the

income tax issue was the demarcation line between candidates. In eleven of

these, the pro-tax reform candidates, were successful. Afterwards, Tom Scott

said that the primaries were not the real test, because only Democrats could

vote. Wait, he said, until November, when everyone would cast their ballots.

For the general election, Democrats developed a very nice tailwind, as the

Clinton campaign took a substantial lead in the state. Connecticut had voted

Republican in every presidential race since 1968, and Democrats had to overcome

that deficit. This time, Clinton's victory certainly helped in close races,

though Connecticut voters are well known for splitting their tickets

effectively.

Finally, election day arrived, the end of a two-year period of struggle and

crisis. When the results were counted, Democrats won solid victories, retaining

control of the House and the Senate, ironically enough by the same margins that

existed before the tax fight--87-64 in the House and 20-16 in the Senate.

Perhaps more important, in the races where pro-income tax candidates were

running, 52 out of 58 were elected or reelected. To top it off, tax nemesis Tom

Scott, who had narrowly lost to Congresswoman Rosa DeLauro two years previously,

was beaten almost two to one in their rematch in New Haven's Third Congressional

District.

It is risky to make comparisons between two very

different situations, and it is also true that New Jersey's story on these

issues is far from over. However, I believe several factors did contribute to

Connecticut's pro-income tax movement faring better than New Jersey's in 1991.

First, the tax reform package lent itself to a more salable message. While New

Jersey's package included a sales tax increase and was linked to an urban school

aid increase, Connecticut's package included a sales tax decrease (though not

enough of one) and a business tax decrease. This allowed Governor Weicker and

the legislature to promote the tax as necessary to economic revitalization and

job growth. Business support for the package helped make that case. In addition,

the progressivity of the package was such that, after the initial shock wore

off, many people realized they were not paying nearly as much as they feared. In

addition, the spending cuts and budget reforms on the spending side helped show

that the tax was not simply a "license to spend."

Second, a true alliance was built between the governor and a core group of

legislators. This allowed for genuine give-and-take, strategizing, and plan

changing to suit legislative and political needs. Many legislators felt they had

a stake in it, while New Jersey's program seemed to come solely from Governor

Florio, with little communication or consultation.

Finally, the fifteen years of patient, determined progressive organizing paid

enormous dividends. There was a strong, principled, and well-positioned set of

legislators ready to wage the fight regardless of the cost. And there was a

strong progressive organizational structure outside ready to swing into action,

create a new coalition, and go out and organize in defense of the legislators,

who in turn kept the grass-roots organizing in touch with the real choice-making

at the Capitol. The building of firmly rooted progressive organizations by LEAP,

the mutual support between these organizations and progressive elected

officials, and the nurturing of community all combined to allow legislators to

withstand the withering pressures they faced.


LOOKING AHEAD

As the 1993 legislative session begins, there is virtually no prospect that a

strong move to repeal the tax will be made. In fact, the legislature is more

pro-income tax than before. However, the unfinished agenda of making positive

changes in the tax will be very much in the forefront of debate. The biggest

obstacle to "repair" in the 1991 and 1992 sessions was that opponents

of the tax felt that "fixing" it would make it more palatable to

voters and therefore less of an issue to run on. This year, it is possible that

without a possibility of repeal, making the tax better for the middle class may

be the best alternative for everyone.

However, one reason for creating an income tax was so that the state could deal

with other major items on the state's agenda. Winning on taxes, however

satisfying, is not enough. We are hopeful that we have constructed a platform of

fiscal stability that will allow us to move on to these other critical areas of

state responsibility -- health care reform, education, poverty, and so on. If we

can do that, it will only be because of the victory, long in coming and

tremendously hard won, of fiscal sanity and of a public sector with the capacity

to deal with the very serious issues we continue to face. Of that victory, and

of the years of organizing that made it possible, people in Connecticut can be justly proud.



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