Speaker of the House James Amann, D-Milford, held a press conference Tuesday to confirm a tentative budget compromise which includes no income tax increase, but makes huge investments in education and health care.
In the compromise budget Democrats lost out on their proposal to institute a progressive income tax increase, Gov. M. Jodi Rell lost out on a local property tax cap proposal, and Republicans failed to push through a gas tax holiday.
House Minority Leader Lawrence Cafero, R-Norwalk, said Democrats “misjudged the public” when they put forth their progressive income tax package. He credited the Republican caucus for changing the budget debate on April 24 when it released its no income tax alternative. He said the Republicans represented the taxpayers during budget discussions and the “taxpayers prevailed.”
In response to their failure to get the progressive income tax package passed, Amann said, “we were trying to get tax breaks for a majority of the residents…we lost on that battle to no tax increase. No tax increase is a pretty good thing.” Amann reminded the media that he was the first one to say after Rell’s budget address in February that he didn’t think the state needed an income tax increase.
The bigger stumbling block will come Wednesday when the legislature’s Education Committee meets to discuss how the money for education will be spent. Will they give the same percentage of money to all school districts regardless or wealth or will urban school districts receive a larger percentage of it at the expense of the wealthier communities?
Cafero said there are 169 cities and towns in this state and “we want to make sure they’re all treated fairly under the ECS formula.” Amann said his caucus would raise hell if the richer communities received more ECS funding at the expense of the urban communities.
Cafero said the legislature should try to get away from pitting the rich towns against the poor cities because when it comes to education funding ‘we’re all one state.”
As far as property tax relief, Cafero said he didn’t think the boost in education funding would help lower property taxes. Some policy experts have said increases in state education aid will lower local property taxes because most increases in local taxes are based on the need to increase education spending. He said Rell’s property tax cap, which wasn’t mentioned during budget negotiations, could have helped mandate this type of relief and without it “I don’t care how much the state has given you…it doesn’t go down,” Cafero said referring to property taxes.
The only tax increase included in the budget is a cigarette tax increase. Eliminating the cliffs in the estate tax for wealthier residents and implementing an Earned Income Tax Credit equal to 10 percent for low income residents are still under discussion. In order to eliminate the estate tax cliffs it will cost around $38 million and to implement an EITC at 10 percent it will cost between $26 to $30 million over the next two years, he said. Amann said the estate tax and EITC go hand-in-hand, and one won’t be agreed upon without the other.
Could this deal all fall apart tomorrow?
“I don’t think so,” Amann said. He said the talks were productive and reminiscent of the budget talks held during the first year of Rell’s tenure.
Amann said he expects to vote on a budget this Friday. Cafero said he thinks that’s optimistic since it takes 48-hours to print the budget. But Cafero conceded it’s the majority party’s call.