Fazio Supports Trimming Sales Tax As Inflation Surges

Ryan Fazio Ned Lamont

Donald Klepper-Smith Inflation

Federal Reserve Board Connecticut Sales Tax

By Scott Benjamin

GREENWICH – State Sen. Ryan Fazio (R-36) says the Republican Senate’s proposed temporary reduction in the state sales tax is “directly targeted at the biggest problem that the public is facing, which is the high cost of living and inflation.”

In early January the GOP caucus called for slashing the sales tax from 6.35 percent to 5.99 percent from February 15 through the rest of 2022.

“I think it can get bipartisan support,” Fazio of Greenwich said in an interview with Patch.com.

CT News Junkie has reported that Democrats appear willing to consider the GOP proposal and also are preparing a plan to lower property taxes.

State Rep. Bob Godfrey (D-110) of Danbury recently told Patch.com that he supports a permanent reduction in the sales tax.

On the GOP package, Fazio said, “It is an immediate, across-the-board and fair way of dealing with inflation.”

CT News Junkie has reported that state Senate Republicans have said that proposal along with a temporary elimination of the one percent tax on restaurant food would save residents $315 million – an average of $250 per family.

Fazio, who captured the seat last August in a special election, said the high cost of living is a chief concern in the district, which includes Greenwich, the northern section of Stamford and a part of New Canaan.

He remarked, “It would be better for regular people to have that money come back into their bank accounts.”

“To ignite the Connecticut economy for the long run, I believe the best alternative is tax reform and income tax rate reductions,” Fazio declared.

He has underscored that proposal since his initial campaign for the Senate seat in 2020, when he was narrowly defeated by one-term Democratic incumbent Alexandra Kasser. She resigned in June of last year for personal reasons.

Fazio, who has a bachelor’s degree in Economics from Northwestern University, said the current seven percent inflation rate – the highest since 1982 - “is primarily a national issue.”

He contends it has largely resulted from “the mix of fiscal and monetary stimulus to a historically extreme extent.”

There has been more than $5 trillion in federal stimulus since March 2020, shortly after the onset of the pandemic.

Fazio exclaimed, “It has created tremendous inflationary pressures.”

Regarding monetary stimulus, journalist Christopher Leonard in his recent book, “The Lords of Easy Money,” stated that the Federal Reserve Board through “quantitative easing” has quadrupled the money supply and encouraged more risky debt.

Is that also a cause for the surge in prices?

Commented Fazio, “At this point in time, I think the preponderance of evidence would suggest that monetary policy is too loose and that is contributing to the high levels of inflation that families are facing.”

In a December column in The New York Times, Princeton University History Professor Meg Jacobs wrote that until the late 1970s presidents were able to tame inflation by addressing corporate price-gouging. She recommended that Democratic President Joe Biden take that step.

Fazio disagreed, pointing to a recent University of Chicago study of economists that indicated that “in excess of 75 percent” believe that monopoly price-gouging “is not the reason” for the rise in inflation.

The Connecticut state fiscal profile apparently is the best it has been in more than a decade.

CT Mirror in January reported that, “Increasing income, sales and corporation tax receipts have state finances finishing more than $2.2 billion in the black this fiscal year — a whopping cushion approaching 10% of the entire budget.”

However, economist Donald Klepper-Smith of DataCore Partners recently told Patch.com that those figures create “a misperception that is unprecedented.”

He added that there is a “false sense of security,” particularly because elected officials are not taking into account the consequences of what happens when the federal fiscal stimulus from the pandemic evaporates.

Klepper-Smith, who headed the economic team for former Gov. M. Jodi Rell (R-Brookfield), said that as of October, Connecticut had 104,000 fewer jobs than it had in 2008 at the start of the Great Recession. It was the only New England state that did not recapture all of its jobs in the 12 years between the Great Recession and the start of the pandemic.

Fazio said that he shares Klepper-Smith’s concern.

He commented that between pension and health care cost for state workers there is “about $100 billion in unfunded liabilities,” over the coming generation.

“The structural problems persist and the decisions made over the last three years have exacerbated them,” Fazio declared.

He said that, for example, the state awarded 5.5 percent salary increases to many state workers in 2020 at the height of the pandemic.

“Other states had delayed or suspended their pay increases,” Fazio related.

State collective bargaining unit leaders have emphasized that the 2017 contract agreement with the state would, according to a consultant to the state Office of Policy & Management, save taxpayers $24 billion over the 20 years until 2037.

Fazio added that the state refinanced the pension obligations in 2019 for the public school teachers at a too-high interest rate of 6.9 percent.

In an interview with Patch.com last July, Fazio said that he believes the state could take more steps to reduce its state employee pension obligations.

He said that “the [U.S.] Supreme Court has upheld several times the ability of states to make alterations to state pension promises on the margins – not dramatic ones, but ones that are necessary to remain solvent and provide basic services.”

Fazio said “that more than 40 states since the 2008 Great Recession have sought to make alterations to their pension payments. He indicated that there have been 25 challenges and 21 times the Supreme Court has upheld the decisions made by the states.”

On another topic, he offered a mixed evaluation of Gov. Ned Lamont’s (D-Greenwich) performance over the 22 months since the pandemic began.

“His decision to help keep schools open and kids in school has been among the strongest of any Democratic governor in the nation,” Fazio remarked. “Data shows that the transmission of COVID is lower in the schools than in the community.”

“However, his desire to keep emergency executive powers for two years, I think undermines our democratic and constitutional system in Connecticut,” he added.

Regarding the recent increase in crime, Fazio said, “The numbers are staggering, the stories are tragic.”

He cited the 30 percent increase in homicides in Connecticut between 2019 and 2020. He added that Hartford and New Haven – the only major cities to report statistics for between 2020 and 2021, have indicated that there was a 30 percent increase over that span.

Fazio remarked, “That’s a crisis. It is surprising in a state with such social capital.”

CT Mirror reported last October that the GOP state senators support "making it easier to move some young people accused of breaking the law from juvenile court to adult court," where they face more serious penalties.

Fazio said he fully supports the Republican state Senate anti-crime package.

He said, “One aspect of it is to transfer older teenagers who are repeat felony offenders to the Youthful Offender part of our criminal justice system which both provides accountability but does so in a balanced and reasonable manner that provides younger offenders with the resources to rehabilitate them. As is, older repeat felony offenders see basically no recourse for their crimes.”

Fazio concluded, “Just last week, a young man from Meriden was arrested three times in one week--the last time for attempted burglary--and released again. The justice system in Connecticut encourages this. It's bad for the direct victims and also for the young men whose bad actions are being condoned. There clearly needs to be a change”

References:

https://ctnewsjunkie.com/2022/...

Despite vanishing federal COVID relief, CT's coffers swell to record levels (ctmirror.org)

https://www.nytimes.com/2021/12/24/opinion/inflation-truman-biden-corporate-power.html

Donald Klepper-Smith, interview with Patch.com January 17, 2022

CT Senate Republicans release anti-crime proposals (ctmirror.org)

Fazio calls for action on unfunded state employee promises | Brookfield, CT Patch

Bergstein offers new plan for resolving state pension crisis | Brookfield, CT Patch

The Lords of Easy Money: How the Federal Reserve Broke the American Economy: Leonard, Christopher: 9781982166632: Amazon.com: Books

Bob Godfrey, interview with Patch.com, January 22.