HARTFORD, CT – Gov. Ned Lamont said he doesn’t intend to offer any more tax breaks this year, after the historic tax cuts adopted last year, but House Republicans believe there’s enough revenue to reduce taxes and make permanent some other fiscal policies.
“We think Connecticut taxpayers deserve to have more money in their pockets, and this would be a step in the right direction,” Rep. Holly Cheeseman, R-Groton, said at a Capitol press conference Thursday.
The budget, adopted on bipartisan votes last year, included around $460 million in tax reductions, including the first reductions in state income tax rates in decades.
The Republican plan includes several changes designed to reduce taxes even further than the tax cuts that were enacted at the beginning of the year. The largest is a proposal to enact a state child tax deduction that would give families a credit of $2,000 per child toward the income taxes they pay. Another proposal would exempt children’s clothing under $100 from the state’s sales tax all year round, expanding the popular tax holiday which occurs for a week during back to school shopping in August.
Other proposals include reducing the sales tax on new cars, which cost between $50,000-$70,000 from 7.75% to 6.35%, and reducing the mandatory paid family leave payroll tax from 0.5% to 0.4%.
“I think there’s a sense among our Democratic colleagues that, because we achieved some measure of tax relief last spring, we can rest on our laurels and retreat to focusing only on figuring out ways to spend more on government programming,” Cheeseman said. “The reality is that we still reside in one of the most expensive states in the nation, and we can’t fix that unless we continue to make strides toward reducing the cost of living here. And we can’t have that conversation without proposals like there.”
Republicans also want to amend the state constitution to make the volatility and revenue caps permanent. The volatility cap requires that certain types of revenue beyond a certain threshold must be deposited into the Budget Reserve Fund (BRF) and excluded from general appropriations.The revenue cap limits the percentage of estimated revenues that may be spent in any fiscal year.
Last year, policymakers extended for five years a set of fiscal constraints, including spending and volatility caps, which are widely credited with helping to generate a series of budget surpluses and around $8 billion in additional payments on Connecticut’s unfunded pension liabilities.
“The relative fiscal stability Connecticut enjoys today is attributable to the strict fiscal controls that were approved, and later renewed on a bipartisan basis,” House Minority Leader Vincent Candelora said. “Amending our state’s Constitution to protect our revenue, spending and volatility caps would cement our commitment to a fiscally conservative approach that demands each or us who serve in state government make informed, and sometimes difficult, choices about our budget priorities.”
Republicans contend that the changes they’ve suggested would cost less than some of the other initiatives the state spends the taxpayer’s money on. “We spend $17 million a year on overtime for corrections officers working inside of prisons,” Candelora said. “I think we can afford $15 million to bring relief to Connecticut’s families.”
Connecticut has had fiscal difficulties in the not-too-distant past. At the same time social service programs and nonprofits are complaining about how they’re still behind due to 20 years of underfunding.
However, Lamont vowed Wednesday that he doesn’t plan on trying to find a gimmick around the fiscal guardrails and that this budget will move money around to make additional funding for things like child care a priority.
Lamont and his budget director Jeffrey Beckham were silent about what parts of the budget could see cuts to make sure those things are funded.
House Speaker Matt Ritter, D-Hartford, said there are some proposals that are worth a debate, including the child tax credit.
However, an absolute “no” is a constitutional amendment for the fiscal guardrails.
“What’s a nonstarter for me is amending the state Constitution to enshrine those guardrails,” Ritter said. “Intellectually, I think the legislature should control the budgeting process, and enshrining those guardrails in the Constitution would give way too much power to the executive branch.
“The legislature would regret that decision. We need to be able to respond to situations as they arise. Statute gives you that flexibility while a constitutional amendment wouldn’t.”
The opening day of the legislative session is Feb. 7 where Lamont will propose his budget adjustments.
