Wrong time for payroll tax increase, state employee raises

On January 1, most private sector, non-union workers will be forced to pay a new half-percent payroll tax to fund a state-run Paid Family Leave Program that, when finally implemented in 2022, will offer some of the nation’s most generous benefits. That same day, unionized state employees will be given $38 million in salary increases.

Those pay raises—an annual increment—are the final portion of an overall 11 percent increase estimated to cost the state roughly $350 million over two fiscal years.

This, despite the global COVID-19 pandemic and subsequent governor-mandated business restrictions that have caused more than 600 restaurants, and thousands of small businesses to permanently close, or that more than 188,000 Connecticut residents are still filing for weekly unemployment benefits.

And just yesterday the governor pledged Connecticut would enter into a controversial regional Transportation Climate Initiative Program (TCI-P) that reports say will cost Connecticut drivers as much as seventeen cents per gallon in the first year.

According to the governor’s press release, in an effort to reduce CO2 emissions, provide jobs and invest in “green energy,” the program would require fuel suppliers to purchase allowances for carbon emissions and use the funds generated to invest in “equitable and cleaner transportation options.”

As noted by the Yankee Institute, over time, as emission allowances are reduced and fuel producers are forced to pay the higher fees, the likelihood is that those fees will get passed on to drivers through higher prices at the pump. Drivers will be forced to pay more per gallon even though they are driving less and their vehicles become more fuel efficient.

The memorandum does the following:

• Lays out the Transportation Climate initiative program (TCI-P) design, and schedule
• Creates a Model Rule which establishes a base annual CO2 emissions cap beginning in 2023 for each member jurisdiction to the TCI-P.
• Requires state fuel suppliers to obtain allowances for the fuel they sell
• Requires the state to invest at least 35% of the proceeds to overburdened and underserved communities
• Requires the member jurisdictions to establish an administrative organization to have cognizance over administrative and technical support to member jurisdictions.

With the pandemic still wreaking havoc on our country physically, emotionally and financially, I am dismayed that that low and middle-income families will be further punished by tax increases while state employees get lavish raises.