United States

Union Givebacks & $1 Billion in New Taxes Key to Lamont Budget

Gov. Ned Lamont is proposing changes to Connecticut's tax system, including imposing the sales tax on a long list of goods and services.

Governor Ned Lamont issued his first budget address to lawmakers, and led with familiar ideas aimed at balancing the state budget.

“I will not allow this budget to be another scene from Groundhog Day, where I come to you year after year, hat in hand, lamenting the fact the fact that we still haven’t addressed our structural deficits,” Lamont told a joint session of the General Assembly.

Lamont hinges balancing the budget on negotiating hundreds of millions of dollars in adjustments to state employee and teacher pensions and benefits. Lamont also proposed changing the payment schedule, in an effort to smooth out some of the state’s payments to avoid spiking costs in the future.

“To those who might say that stretching out these mortgage-like payments over a longer time period is just more kicking the can, I would argue that this crisis was generations in the making,” he said.

Sal Luciano with the Connecticut AFL-CIO said he’s happy the governor has proposed raising the minimum wage to $15 per hour, and supporting paid family leave policies, which were included in his budget, but said more givebacks from unionized public sector workers is too much for them to stomach yet again.

“We are disappointed that Gov. Lamont has broken his campaign promise to not seek further givebacks from state workers after they made concessions three times over the last decade,” Luciano said. “Our teachers, fire fighters, nurses, corrections officers, and other state workers have already made concessions worth tens of billions of dollars, and to continue to go after these public service workers is patently unfair.”

Lamont says he intends to respect the process at every turn.

“Some of you think that Connecticut needs a 'Wisconsin Moment,' where we walk away from collective bargaining and tear up the contracts. I want an anti-Wisconsin moment, a Connecticut moment where we show that collective bargaining works not just for retirees but also for the next generation of state employees and the next generation of taxpayers.”

The governor also proposed broadening the sales tax base, by instituting the sales tax for the first time on some services like digital streaming and professional services like legal, real estate, and accounting.

“My sales tax proposal would broaden the base so that digital goods are treated equally and more significantly that we are capturing a growing segment of the economy. For instance, movie theaters charge a tax, why shouldn’t Netflix be treated the same?”

The governor also proposed removing sales tax exemptions from veterinary services, beauty and barber shops, and dry cleaning, among others.

Republicans disagree with that plan.

Rep. Themis Klarides said, “Moving Connecticut forward is not hurting the middle class and that’s what this does.”

Removing sales tax exemptions is not a new concept, and it’s been discussed for years in the State Capitol, but they’ve never actually been changed.

Democrats in control of both the House and Senate acknowledge they may be necessary to close a combined $3 billion combined two year budget shortfall.

“It was structured at a time when our whole economy was based upon products and goods. Now it’s based primarily on services so we have to make that change and have some basic expansion.”

Lamont presented his two-year budget plan on Wednesday to the state legislature and his office posted the governor's budget online here.

A fact sheet on the budget is posted here.

The office has also put together a question and answer document on the budget here.

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