Legislative Democrats and Gov. Ned Lamont’s administration announced Wednesday the details of a $24.2 billion budget adjustment package, which they say provides around $500 million in tax relief including extending a gas tax holiday until December.
Lamont and legislative leaders outlined the agreement during an afternoon press conference in the state Capitol building. Both chambers of the legislature are expected to raise the budget for a vote before the session concludes next week.
“Overall, I think you see a budget that’s going to take care of folks most in need, a budget that’s done on time, making significant investments that allow people to get back to work,” Lamont said.
Among the tax cuts included in the election-year budget an expanded property tax credit, a $100 million municipal reimbursement that will reduce car taxes in an 75 towns, a one-year $250 per-child tax credit that will cost $125 million, a $40 million provision to cut pension taxes for some retirees, and a $40 million expansion of the Earned Income Tax Credit for 200,000 low-income workers.
Meanwhile, an ongoing holiday of the state’s 25-cent excise tax on gasoline, previously set to expire on June 30, will be extended through Dec. 1.
The budget adjustment represents a 2.5% increase in spending over the budget passed last year and comes at a time when Connecticut is flush with cash. As of last week the state was expected to reach a $4 billion budget surplus and had recently spent $1.7 billion in excess funds to pay down unfunded pension debt.
On Wednesday, Senate President Martin Looney said the state’s current fiscal environment allowed policymakers flexibility to provide tax relief and continue funding priorities.
“This was a time when we were excited about this process rather than dreading it,” Looney said. “We saw that there were opportunities here to do things that needed to be done, rather than which of our beloved things were going to have to take a hit.”
Better than expected revenue reported last week cleared a sticking point between Lamont and lawmakers, who had proposed to forgo a fiscal safeguard called the revenue cap in order to fund the child tax credit and greater spending on child care programs.
The budget agreement also complies with federal rules, which Lamont has maintained restricts the extent to which the state can pay for tax cuts with one-time federal dollars. Jeffrey Beckhem, Lamont’s budget chief, estimated Connecticut still had between $400 and $500 million in American Rescue Plan Act funding still unspent.
Although it is an adjustment to a budget plan passed last year with bipartisan support, the agreement announced Wednesday was arrived at through closed-door negotiations between legislative Democrats and the governor’s office, who said they hoped to see bipartisan support.
At an unrelated press conference Wednesday morning, Republicans said they’d been left out of the process. Last week, Republican leaders announced a broader tax cut plan which relies on challenging federal relief funding rules in court.
“We’re going to find out probably when you find out [details on the budget],” Senate Minority Leader Kevin Kelly said. “They’re inside in a room, talking about how they can keep the peoples’ money… we’ve come out and talked about how we can provide immediate tax relief to Connecticut families.”
Legislators had expected to vote on the budget Saturday, but House Speaker Matt Ritter said it might get postponed because of protests outside the building by hate groups.
Instead, the budget is expected to be debated and passed Monday and Tuesday.