Connecticut Senate Sends Budget With Tax Cuts to Governor

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The Connecticut Senate sent a revised, one-year $24.2 billion state budget to Democratic Gov. Ned Lamont’s desk on Tuesday night that Democrats lauded as historic but Republicans derided as falling short for the taxpayers.

While the plan cuts taxes by an estimated $600 million and dedicates more money to some popular initiatives, including a major mental health care initiative, only two Republicans in the House and Senate — Sens. Kevin Witkos of Canton and Heather Somers of Groton — voted for the deal negotiated between Lamont and Democratic leaders of the General Assembly.

GOP leaders said the level of tax relief is a disappointment given the state’s $4.8 billion projected surplus, and that lawmakers should’ve made systemic changes to Connecticut’s tax system.

“Six hundred million dollars is a drop in the bucket compared to the economic harm that has happened to Connecticut families under this majority,” Senate Minority Leader Kevin Kelly, R-Stratford said, referring to the Democrats, who control the General Assembly. Republicans offered an amendment to cut taxes by about $1.2 billion, including reductions to the sales and income taxes, but it was defeated on party lines.

Only one Democrat in the General Assembly, Sen. Dennis Bradley of Bridgeport, voted against the package.

Democrats argued that federal rules for how states can spend pandemic relief funds have limited how much states can cut taxes. But Kelly, citing newly released data from the legislature’s nonpartisan fiscal office, said Connecticut would be able to cut up to $1.4 billion in taxes. The budget bill includes more than $1 billion in funds from the American Rescue Plan Act.

Democrats steadfastly defended the plan, which takes effect July 1. They said it’s responsible, prudent and balanced, dedicating state resources to address major issues identified during the COVID-19 pandemic. Those include mental health services for children, poor air quality in schools, various workforce shortages and financial struggles faced by day care programs.

“This is a humane budget, a responsive budget, and meets the needs and aspirations of the people of the state of Connecticut,” Senate President Pro Tempore Martin Looney, D-New Haven, said. “We are not people who shut our eyes to the needs of others.”

The Senate vote came a little more than 24 hours before the legislative session ends Wednesday at midnight.

Here are some highlights of the bill, which revises the second year of the two-year budget passed last year:

CONNECTICUT TAX CUTS

The list of tax changes includes a continuation of the cut to the 25 cent-per-gallon gas tax and free bus service until Dec. 1; creation of a new, one-year $250 child care tax credit in the form of a rebate; the accelerated phase-out of taxes on pension, 401K and annuity income starting with the 2022 tax year; a lower limit on local car taxes that applies to 75 communities; and an increased local property tax credit against the personal income tax, from $200 to $300, that applies to more taxpayers.

Beginning with the 2023 tax year, the bill increases the state’s Earned Income Tax Credit from 30.5% to 41.5% of the federal credit, which is available to working people of modest means. It also creates a new $2,500 personal income tax credit for taxpayers who’ve had a stillborn child that would have been claimed as a dependent, affecting an estimated more than 100 families a year.

The bill also eliminates the 6% admissions tax on movie tickets. Sen. John Fonfara, D-Hartford, said the industry has “taken it on the chin” and noted that the number of movie theaters in Connecticut dropped from 61 to 50 during the pandemic.

PANDEMIC PREMIUM PAY

The bill creates a new Connecticut Premium Pay bonus program for private sector workers who were on the job during the entire period of Lamont’s public health and civil preparedness emergency. Eligible workers are those included in phases 1a and 1b of the U.S. Centers for Disease Control and Prevention’s recommended rollout of COVID-19 vaccinations. They’d receive a range of $200 to $1,000 depending on their income. Eligible part-time workers will receive $500 under the program, to be administered by the State Comptroller.

DEBT REDUCTION

The plan reduces the state’s unfunded pension liability by $3.5 billion. Also, $40 million in federal pandemic funds are being used to reduce the estimated $493 million debt in the state’s unemployment trust fund. That’s in addition to $155 million in federal funds deposited last year, in an effort to reduce the burden on businesses that have to cover the cost.

MENTAL HEALTH AND OTHER SPENDING

The proposal includes additional funding for various mental health and substance abuse treatment and support services, including money for 24/7 mobile crisis services across the state and services for children. There’s also funding for school readiness programs and child care centers, including “emergency stabilization” grants; more than $220 million in new money for nonprofit social service agencies; free menstrual products in restrooms used by students in grades 3-12; and increased funding for special education and bilingual programs.

Copyright The Associated Press
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