The state Senate gave final approval late Tuesday to a $24 billion election year budget plan that includes around $600 million in tax relief while enabling the state to make an $3.5 billion payment on its unfunded pension debt.
Senators voted 24-12 at around 10:30 p.m. to send the midterm budget adjustment to the desk of Gov. Ned Lamont, who has hailed it as a historic reduction in taxes. Sens. Kevin Witkos, R-Canton, and Heather Somers, R-Groton, joined most Democrats in voting for the bill. Sen. Dennis Bradley, D-Bridgeport, joined most Republicans in opposition. The House passed the legislation on a strict party-line vote Monday.
Sen. John Fonfara, a Hartford Democrat who co-chairs the legislature’s tax-writing committee, called the budget both balanced and prudent.
“The people of Connecticut want and expect us to make decisions that are good for us today but also, their children and grandchildren tomorrow,” Fonfara said. “The revenue decisions we propose here will help many across our state but they are responsible.”
The budget includes both temporary and permanent tax relief proposals. It extends until December an ongoing suspension of the state 25-cent-per-gallon gas tax that had been scheduled to expire in June.
The budget also continues to fund free bus service until December. It creates for one year a new $250 per-child tax credit for lower and middle earning families and expands for one year eligibility for the Earned Income Tax Credit, which boosts the tax returns of the state’s working poor.
More permanent tax breaks include a provision that caps the mill rate at 32.46 which will reduce the car taxes in 75 towns and reimburse municipalities for the lost revenue. The budget also expands eligibility for a property tax credit and increases it from $200 to $300. Another provision speeds up a plan to eliminate taxes on pensions and annuities.
The budget leaves much of its surplus unspent, ensuring the state can make a scheduled $3.58 billion contribution to its long unfunded $95 billion pension debt.
“We’ve done all of this — all of this by making sure we’re paying down the thing that holds us back and that is our pension plans,” said Sen. Cathy Osten, a Sprague Democrat who co-chairs the Appropriations Committee, as she introduced the bill. “We need to stay laser focused on doing that.”
The bill received more bipartisan support than it did in the House, where Democrats approved it on a party-line vote. But Senate Republicans said the $600 million collection of tax cuts fell well short of relief it should have offered. During the debate, Republicans unsuccessfully attempted to amend the document to include a $1.2 billion tax cut package they had proposed in April.
Senate Minority Leader Kevin Kelly said a recent estimate from the Office of Fiscal Analysis had concluded that limitations on the use of federal relief money was nowhere near as stringent as the governor had interpreted, meaning the budget could send more money back to taxpayers. The Democrats’ tax cuts did not go far enough, Kelly said.
“Six hundred million dollars is a drop in the bucket compared to the economic harm that has happened to Connecticut families under this majority,” Kelly said.
“When you could’ve done $1.2 billion, why settle for half a loaf when you could have had a whole loaf?” he asked later.
Sen. Ryan Fazio, R-Greenwich, said the average family in Connecticut is going to be hit by inflation this year to the tune of $6,000 or more to their cost of living. He said they are able to give bigger tax increases because of the influx of federal funds.
“It should be returned as much as possible to Connecticut families who are hurting,” Fazio said of a Republican amendment that failed along party lines.
He said they should provide $1.2 billion in tax relief to Connecticut families by cutting the sales tax and income tax relief.
“This is a far better alternative. It will make our state budget better,” he added.
Sen. Saud Anwar, D-South Windsor, asked senators to look at the budget with a “glass half full” perspective.
“It’s almost like some of my colleagues can never be happy,” Anwar said. “We are doing well. This is a time for celebration. When was the last time when we had conversations around this topic when the fiscal status of our state was so good?”
