Legislative Democrats spoke in glowing terms Wednesday of their two-year budget proposal, bolstered by federal stimulus funding, which they will take into negotiations this week with Gov. Ned Lamont’s administration.
The two-year, tax and spending plan, drafted by leaders of the legislature’s Finance and Appropriations Committees, will use $2.8 billion in federal stimulus funding and will boost support for progressive priorities like town aid, broadening the Earned Income Tax Credit and expanding Medicaid coverage.
The legislature’s budget package also preserves proposals to increase taxes on higher-earning residents through hikes in the capital gains tax and the creation of a new consumption tax.
Democratic leaders praised the proposal as appealing to a wide swath of their members, a departure from recent budget cycles in which looming state deficits have forced difficult spending choices.
“I’ve been here for 12 years and this is the first year we’re not forced to craft a budget that chooses between a lesser of a host of evils, which is most often than not, draconian spending reductions that impact our most vulnerable residents,” House Majority Leader Jason Rojas told reporters during a virtual press briefing.
But the inclusion of the tax increases will likely be met with resistance from the governor, who threatened to veto some of the proposals when they were approved in April by the Finance Committee. In an email Wednesday, Max Reiss, Lamont’s chief spokesman, restated that opposition.
“Governor Lamont has been clear for months: Connecticut doesn’t need more taxes, we need more taxpayers,” Reiss said. “We look forward to negotiating a budget, starting this week, that reflects the priorities of supporting our state’s most critical needs, maintaining fiscal responsibility, and addressing equity.”
House Speaker Matt Ritter said the back and forth was part of the negotiations process and he did not expect to pass a budget package that the governor would later veto.
“We’re about to enter into the most serious round of budget negotiations, right? Now we’re getting to that moment and we’ve heard the governor. The governor has a loud microphone,” Ritter said. “He has the right to critique our proposals and we have the right to go back to him with different ideas that we care about.”
Senate President Martin Looney added that all the taxes that had previously been discussed were still on the table. He was also open to “additional things that will become part of the negotiation,” but he declined to specify Wednesday what those additional policies might be.
“We’re interested in pushing the principle of progressive taxation and progressive revenue structure to whatever extent we possibly can in every context because our battle since 1991, when the income tax was first enacted as a flat rate, has been incrementally to add progressivity to it,” Looney said.
Republican leaders told reporters they saw no reason to raise taxes when the state is receiving $2.8 billion in federal funds and has $3 billion in its Rainy Day Fund. House Minority Leader Vincent Candelora offered to participate in budgetary negotiations in an effort to deter Democrats from any tax hikes.
“I’m surprised to see that we’re looking at a more progressive income tax. That, frankly, last time Democrats implemented Connecticut saw deficit after deficit after deficit,” Candelora said.
Candelora was referring to 2016 when the top 100 taxpayers returned $200 million less in revenue to Connecticut, according to the Office of Fiscal Analysis. Why would that matter? The top 1 percent pay about 30 percent of the income tax revenue in Connecticut.
Candelora said there’s no need to increase revenues, but Democrats say that they want to make sure they have enough revenue after the two years of federal revenue dries up.
Senate Majority Leader Bob Duff critiqued Republicans as quick to criticize without offering solutions.
“We govern and we work and we present our policies to the people of the state of Connecticut. The Republicans still have not presented a budget here for this session for the biennium and what I see them doing is picking apart various pieces and criticizing but yet not offering a plan of their own.”
Despite the rift on taxes, legislative Democrats were optimistic they would quickly arrive at a deal with the Lamont administration and pass a budget before the legislative session adjourns on June 9. Appropriations Committee co-chairwoman Sen. Cathy Osten said they were hoping to have the issue wrapped up before the end of May.