$500 million budget shortfall
Democratic legislators, who control both houses of the Connecticut Legislature, unveiled the tax proposal late Monday as part of a package to fill a $500 million budget shortfall. Not surprisingly, the tax plan has drawn the ire of media groups in the state and Washington.
"It's not going through like a traditional bill. It was put together by the Democratic caucus behind closed doors," said John Barrett, CEO of Barrett Outdoor Communications and president of the Outdoor Association of Connecticut. He said a vote on the measure could take place as soon as tonight, but that legislators have already delayed a vote several times.
Mr. Barrett said he is worried the tax could have significant effects on ad spending and might prompt the kind of advertising boycott of Connecticut that Florida experienced when it approved an ad tax increase 1986 and repealed it less than a year later.
'Quaking in our boots'
"We are quaking in our boots," he said. "It would have a major impact on us. Advertisers are all working on fixed budgets. Because the advertising industry doesn't have much in variable costs, it would come right off our bottom line."
Dan Jaffe, executive vice president of the Association of National Advertisers, said Connecticut is the latest state to look at advertising taxes to fill budget shortfalls; seven other states are considering similar proposals. The ANA sent out a warning to members about the Connecticut tax proposal and also wrote state legislative leaders warning an ad tax would hurt local companies and be difficult to administer.