Hugh McQuaid Photo
Senate President Martin Looney (Hugh McQuaid Photo)

Majority Democrats in the Senate announced Tuesday they would prioritize exempting retired military veterans from paying income tax on their retirement benefits through a bill that would cost the state about $4 million per year.

Senate President Martin Looney discussed the proposal during a Hartford press conference Tuesday, just one day before Gov. Dannel P. Malloy is scheduled to propose a budget that must close deficits of more than $1 billion in each of the next two years.

Looney said the state could afford to forgo roughly $4 million in revenue each year to extend the existing tax break on veteran retirement pay from 50 percent to 100 percent.

“We think it’s a relatively small amount. And in terms of the inequities in our society, it’s the least we should be doing for our veterans,” he said.

Senate Democrats are not alone in proposing tax breaks this week. Malloy began the week by announcing a proposal to shave the state sales tax from 6.35 percent to 5.95 percent over two years. The governor offset his tax cut by scrapping a scheduled exemption on clothing. During the first year, Malloy’s proposal increases revenue for the state.

Looney has not endorsed the governor’s proposal and reminded reporters that the budget Malloy presents Wednesday will be reworked by the legislature throughout a lengthy committee process. He described the governor’s budget as “the beginning of the negotiation” that will span months.

“I think we will inevitably be making some tax adjustments. The governor has suggested some, we will be suggesting others and tomorrow, when the governor gives us his presentation, that begins our process,” he said.

Several Democratic senators spoke in support of the bill that would affect about 11,000 Connecticut residents who are retired veterans of the Army, Navy, Air Force, Marine Corps, Coast Guard, as well as the Army and Air National Guard.

“This is really not an issue that is a large issue for us in our state budget, but it is a large issue for veterans of our state,” Senate Majority Leader Bob Duff said.

Greg Smith, commander of the Veteran of Foreign Wars Department of Connecticut, called the policy “a little overdue.”

“It applies to so many people I know that have served the state of Connecticut and particularly in the Army National Guard and the Air Force National Guard that have a difficult time staying here in Connecticut after they retire,” he said.