Rep. Ted Moukawsher of Groton was the lone Democrat on the Finance, Revenue, and Bonding Committee to vote Tuesday against the governor’s $155 million election-year tax refund.
The money for the refund would come from the 2014 surplus, which was certified by state Comptroller Kevin Lembo on Tuesday at about $504.9 million.
The final vote was 31-19 in favor of the proposal. Moukawsher joined Republicans in voting against it partly because of Lembo’s analysis of the current budget.
Lembo warned Gov. Dannel P. Malloy in his monthly letter that most of the 2014 surplus comes from “a one-time tax amnesty program, and from the most volatile component of the income tax, which relies on strong stock market performance.” He also reminded the governor that the legislature’s Office of Fiscal Analysis and the Office of Policy and Management has estimated budget shortfalls beginning in 2016.
“That’s unfortunate that we’re not seeing ourselves in deficit,” Moukawsher said, referring to the more than $1 billion deficit in fiscal year 2016.
He said the current surplus is the product of a number of things including “borrowing.”
One of the failed Republican amendments would have utilized up to $196 million of the surplus to pay down the 2009 Economic Recovery Notes. Payment on the notes were postponed until 2018.
“We are told we’re going to have a $1 billion deficit in 2016. I think we have to take that seriously and I don’t feel that we should do anything with this money but put it aside to respond to that eventuality,” Moukawsher said.
He said when he goes back home he has to answer to his constituents and let them know he used his best judgment and “I can’t in good conscience say we have money to spend when we’ve been in a very precarious situation.”
Sen. Toni Boucher, R-Wilton, wondered if there even is a surplus or if it’s just money from borrowing that hasn’t been used yet.
“I think what everyone wants to see is real tax reform,” Boucher said. “This is not real tax reform.”
Republicans offered two amendments to the proposal, but both failed along party-lines.
Rep. Vincent Candelora, R-North Branford, said the bill ignores a long-term solution.
“We really should be using every surplus revenue to institute policies that would pay down long-term obligations and policies,” Candelora said. “In my district, people are asking, `What can I do with $55?’ Just keep the money and pay down debt.”
Rep. Patricia Widlitz, who co-chairs the committee, pointed out that the words “rebate” and “refund” have been used interchangeably, but mean completely different things. She said the refund is an acknowledgement that taxpayers have helped the state get through some tough times by contributing a little bit more in 2011 when they were asked.
“This is a tribute to the people who withstood the hard times with us,” she said.
The $55 refund also won’t be subject to a federal income tax like a rebate.
“Three years ago when we were faced with significant challenges with respect to our budget, major deficits, the governor of this state asked for the citizens of this state, taxpayers in the state to share in the sacrifice to get us over the hump,” Sen. John Fonfara, the other co-chairman of the committee, said. “Many of us here support that initiative and the taxpayers of the state stepped up.”
Fonfara said Malloy could have punted and deferred many of the state’s long term liabilities, but he didn’t.
Sen. Minority Leader John McKinney, who is running for the Republican nomination for governor, begged to differ calling Democratic lawmakers a “rubber stamp” for Malloy.
“Like the governor’s proposal, this budget is unbalanced, fails to adequately pay down state debt, and ignores long-term structural deficiencies in state government,” McKinney said in a statement. “The result is a tax and spending plan Connecticut residents cannot afford today, and one that is projected to sink the state back into a $1 billion deficit by the middle of next year.”
