After Republicans failed to table revenue projections the Senate will use today when it debates the two-year, $40.11 billion budget, the legislation passed the Finance, Revenue, and Bonding Committee 31 to 18.
The vote was mostly along party lines with Rep. Kathy Tallarita, D-Enfield, voting against it.
Aside from the $2 billion hole left in the budget for labor concessions, Republicans objected to the inclusion of the Internet sales and cosmetic surgery taxes, since the Commissioner of Revenue Services has said the taxes will be difficult to collect.
But even more objectionable to Republicans was the $369 million surplus built into the first fiscal year and $635 million built into the second fiscal year of the budget.
Sen. Andrew Roraback, R-Goshen, said the legislature was passing the largest tax increase in history with a $1 billion surplus built into it.
“That’s an afront to people who are trying to hold onto what they have,” Roraback said.
Rep. Vincent Candelora, R-North Branford, agreed. He said by assuming the state will take in a $1 billion more than it needs the legislature is essentially overtaxing the residents of Connecticut.
Sen. Toni Boucher, R-Wilton, said the Connecticut public is already “overtaxed” and trying to get more revenue from them will only hurt the economy and business growth in the state.
“There’s growing outrage on behalf of the public for good reason,” Boucher said.
This year’s estimated $458 million surplus is already dedicated to paying down the Economic Recovery Notes the state planned on borrowing and paying back with a charge on consumers’ electric bills.
The 2012-2013 revenue projections do not include the 3-cents-per-gallon gas tax increase proposed by Gov. Dannel P. Malloy. The Office of Fiscal Analysis said that money will be made up with additional money from the gross receipts tax, which is the 7 percent tax applied to the wholesale price of gasoline, and some additional savings in the special transportation fund.
Rep. Sean Williams, R-Watertown, was quick to point out that the gross receipts tax is adding to the price of gas every day as the cost per gallon climbs. He said today the wholesale price of gas is $3.46 which means the gross receipts tax is raising 26 cents per gallon. That’s on top of the 25 cent flat excise tax on gasoline.
“We’re not doing anybody any favors by reducing the gas tax,” Williams said.
Rep. Patricia Widlitz, D-Guilford, said she understands his concern, but the state has a responsibility to make sure it has enough money in the transportation fund in order to keep its bond rating.
Williams was also vocal about the Internet sales and cosmetic surgery tax, which Revenue Services Commissioner Kevin Sullivan said in this letter to Malloy’s budget director that he would have a difficult time collecting.
He wondered how they could be included as part of the revenue package if the state was uncertain it was going to be able to collect them.
Widlitz said the Internet sales, also known as the remote sellers tax, was a policy decision to make sure brick and mortar stores in the state weren’t at a disadvantage in the marketplace. Bookstores, especially, have complained they’re losing business to Internet retailers because customers don’t have to pay the sales tax when they purchase goods on the Internet.
Widlitz said currently those buyers are supposed to be reporting those purchases on their income tax returns. She said the budget item will just force the retailers, such as Amazon to collect the tax and transmit it to the state.
“There were decisions across the board that nobody is going to be happy with,” Widlitz said.
The Senate is expected to vote on the budget this afternoon. However, at least one Democrat, Sen. Ed Meyer, D-Guilford, won’t be voting in favor of it.
In an elevator ride at the Capitol, Meyer told CTNewsjunkie that he’s voting against it for three reasons.
“The first is the tax increases are more than double the spending cuts,” Meyer said. “That’s just a whacky philosophy.”
The second reason is a fiscal crisis is an opportunity to downsize government and the budget only eliminates 280 of the 50,000 state employees. He said some agencies are bloated.
The third reason is the $2 billion hole from the labor concessions.
“That makes this a very Alice in Wonderland budget,” Meyer said before heading into caucus.