Christine Stuart / ctnewsjunkie photo
Gov. Ned Lamont and legislative leaders (Christine Stuart / ctnewsjunkie photo)

HARTFORD, CT — Gov. Ned Lamont and Democratic legislative leaders gathered in the governor’s Capitol office Thursday to announce that they have reached an agreement on a two-year, $43-billion budget that closes a $3.7 billion deficit.

“We’re gonna have an honest budget done on time so that people can plan accordingly,” Lamont said.

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“We’re going to get this budget balanced without raising tax rates on anybody,” Lamont said.

However, the budget does lower the tax credit for the pass-through entity tax.

Rep. Jason Rojas, D-East Hartford, said the group of people they are increasing taxes on through the tax got a bigger advantage on their state taxes under the 2017 federal tax reform.

Rojas wouldn’t say how much revenue the change in the tax rate would bring into the state. He also said they didn’t necessarily target this group of people because they benefited from the Trump tax reform.

Office of Policy and Management Secretary Melissa McCaw said the pass-thru entity tax is expected to bring in about $50 million each year of the biennium.

She said the pass-thru entity rate will not change, but the credit limited liability companies will receive will be capped at 87 percent as opposed to its current 93 percent. 

The new budget deal also modifies the broadening of the sales tax base and structure.

While few details were available about what would be taxed, McCaw said it would only bring in about $50 million by the second year of the budget. Lamont’s initial budget proposal would have brought in $292 million in new sales taxes in 2020 and $505 million in 2021. It’s unclear what services would see sales tax increases.

As far as the surplus is concerned, McCaw said $381 million will be used to re-amortize the Teacher’s Pension Fund and the remainder will be used to address the tentative agreement with the Connecticut Hospital Association, which sued the state three years ago over the provider tax.

McCaw said $160 million in surplus funds would be used for the hospital settlement.

Another $20 million will go to Dalio Philanthropies, which has gifted $100 million to the state for programming for at-risk students.

The nonprofit community that provides services to some of the state’s most vulnerable population through 1,200 contracts were disappointed none of the surplus dollars would be directed toward their organizations.

“Plans for the use of surplus dollars have been shared, and they don’t include restoration of a decade of budget cuts and rescissions to Connecticut’s struggling community nonprofits,” said Gian-Carl Casa, president and CEO of the CT Community Nonprofit Alliance. “They do include other choices.”

The budget does not include the additional 2% surcharge on capital gains, which Lamont opposed, but which Progressive members of the Democratic caucus supported.

House Majority Leader Matt Ritter, D-Hartford, said the divide between the progressives and the moderates in the Democratic caucus “has never existed.”

“It will be overwhelmingly supported by the Democratic caucus,” Ritter said.

Senate Republican Leader Len Fasano, R-North Haven, said Republicans have not been given any details of the budget and were not part of the negotiations this year.

“They have no common sense with respect to the Connecticut economy,” Fasano said.

Senate President Martin Looney, D-New Haven, said he’s not going to get into any details on the budget until they’re able to talk about it with their members.

House Speaker Joe Aresimowicz, D-Berlin, said the governor’s leadership was key in securing the hospital deal.

“Without the hospital deal this budget would have been changed dramatically,” he said.

Aresimowicz said he was also happy that governor allowed them to preserve the phase-out of income taxes on Social Security and pensions.

“We hear a lot of times that people leave the state of Connecticut for tax-friendlier climates, especially in retirement,” he said. “Well we’re taking that off the table.”