Governor, Democratic leaders do not plan to raise taxes on income, cigarettes or booze. But don’t count on a higher property tax credit, either.
House Democratic leaders scheduled a mid-afternoon caucus Saturday to discuss a tax deal for the next two year budget cycle. If the caucus approves, then a full budget could be presented on the House floor later today.The tax plan does not impose a higher income tax rate on any bracket. Democrats had proposed raising tax rates starting with individuals making $250,000 per year. However, the governor agreed not to raise taxes on cigarettes and alcohol.Policy makers had to come up with enough revenue to cover a roughly $15.27 billion spending plan hammered out this week. With current revenue estimates on the rise, negotiators believed they would have to raise enough taxes to cover an estimated $300 million hole in year two of the next budget cycle. So instead of higher income taxes, a new estate tax will be imposed on any income over $2 million, while the gift and succession taxes will be eliminated, Rell’s budget chief Robert Genuario said early this afternoon. This a device expected to raise $20 million in the first budget year and $80 million in the second year, Genuario said, though he says those numbers are not completely solid. “It’s harder to estimate the estate tax than the income tax because you don’t know who is going to die,” Genuario said. The Democrats abandoned their plan to maintain the property tax credit at $500, which it is scheduled to reach this year. Instead, the credit will remain at $350, and move to $400 in year two. That saves the state $105 million this year, and $70 million next year, Genuario said. As another sop to progressives, the administration agreed to a maintaining the business surcharge at 20 percent in 2006 and 15 percent in 2007. Rell had originally proposed phasing out the surcharge. That will bring in $40 million this year, and $30 million next year, Genuario said. A new $25 per month fee on HUSKY recipients should bring in $15 million a year, Genuario said, which includes administrative costs. Asked if people will be kicked off the plan if they don’t make a payment, Genuario said yes, but recipients will have a grace period so one missed payment doesn’t mean an automatic purge.