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April 18, 2016 Rule of Law

State needs human-services lockbox

John Horak

One of the most disturbing features of the state's fiscal melee is the insensitive  manner in which the disabled, homeless, and the “least fortunate among us” are used as pawns to advance political and financial agendas far removed from the actual plight of these people.

The only organizations with an untarnished and authentic claim to serve the interests of the least fortunate are the state's independent nonprofit human services organizations — with respect to both the clients they serve and the people they employ to serve the clients.  These nonprofits are funded almost completely through state “purchase-of-services” contracts, and the fiscal tsunami that now threatens the cash flow of state employees and everyone else on the state's payroll swamped the nonprofits over a decade ago. The funding under the purchase-of-services contracts has been flat at best during this period, and the nonprofits have already been doing what no other beneficiary of the state's money wants to do — the same amount of work with fewer resources.

I wrote about the human-service nonprofits last April (Ct. unfairly pays human services nonprofits), and I won't repeat what I said then other than this: First, Connecticut maintains an awkward two-class system in which the state and the nonprofits both provide social services in a competitive arrangement in which state personnel are paid significantly more than the nonprofit employees (who are paid close to minimum wage and often qualify for public benefits). Second, the care needs of the clients and prospective clients (there are waiting lists) continue unabated (and increase in severity as the clients age), a situation exacerbated by the inequality inherent in this two-class system.

The duplicity was on full display at the Capitol last June when the argument for tax increases was based on a barrage of rhetoric (which the nonprofits were encouraged to support and did support) about making sure the wealthy and large corporations paid their fair share to help the less fortunate; however, at the end of the day the new tax money was siphoned off and into the abyss on the state's balance sheet, with some crumbs left on nonprofits' doorsteps.

This brings me around to a story in the March 25th Hartford Courant concerning Connecticut's suddenly “new” budget realties (which are a decade-old reality for the nonprofits) in which a spokesperson for progressive interests in the state called attention to New York state “where 40 millionaires said in an open letter … that they are willing to pay more in taxes for government services for the homeless and the needy.”

The argument is that Connecticut's millionaires should be similarly willing to pay higher taxes to help the least fortunate among us. I agree. Moreover, even though I do not have the financial capacity of any of the 40 New York millionaires (or of however many millionaires there are in Connecticut), I would gladly pay some form of human-services surtax as long as the additional revenue actually found its way into the nonprofits' hands.

This is a reasonable suggestion assembled with some of the same thinking behind the pending constitutional transportation lockbox, which will secure tax revenues raised to fund the Governor's transportation infrastructure initiative. This plan could be implemented by statute, and it could be called the Connecticut Human Services Surtax.  The surtax rate and the income levels on which it would be imposed could be calculated based on relevant data, and the statute would have two other features.

First, because money is fungible there would be a funding baseline below which the amount of general budget dollars allocated to nonprofit providers could not be decreased. This would be necessary to ensure that the new human-services surtax revenue would be added to the nonprofits' budgets — to prevent the state from taking away with one hand what the surtax yields for the nonprofits with the other.

Second, to further lessen the risk that the new funds would be diverted,and to avoid the administrative costs of a “middleman” collecting and redistributing the funds, the surtax would be paid directly to the nonprofits. The details would be easy to work out: There would be a published list of eligible human-services nonprofits, the nonprofits would have to issue a receipt to prove payment, and limits could be put on the amount contributed to any one nonprofit to ensure the money is spread about fairly.

The appeal of a plan like this is obvious — it would very efficiently distribute funds from the most fortunate directly to the least fortunate (and those who care for them at woefully unfair wage levels) — a win-win situation.

I am a realist and recognize that legislation of this type would be a hard sell in the legislature.  But we are living in times extraordinary enough to warrant out-of-the-ordinary ways of doing things, and it may be that government would be better able to sell tax increases to voters if they know the specific purposes for which the new tax revenue would be spent.

John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. His opinions are his own.

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