CT budget relies on $75M in newfound ‘miscellaneous’ tax revenues

Benjamin Barnes, Gov. Dannel P. Malloy's budget director.

CT Mirror

Benjamin Barnes, Gov. Dannel P. Malloy's budget director.

The $19 billion state budget the House of Representatives is expected to adopt late Saturday relies on nearly $200 million in fund sweeps, risky savings assumptions and other gimmicks to stay in balance – including the last-minute discovery of $75 million in “miscellaneous” tax revenue.

The package, negotiated by Gov. Dannel P. Malloy’s administration and majority Democratic legislators, boosts spending by less than 2 percent while delaying planned tax cuts for teachers and consumers and canceling the launch of keno.

According to the budget bill and related analyses and schedules, it also provides special relief for public colleges and universities while adding 1,020 pre-kindergarten program slots.

Shortly before the Democratic-controlled Finance, Revenue and Bonding Committee adopted a revenue schedule for the new budget, minority Republicans questioned why $75 million in new revenue — enough to close one-quarter of a huge deficit that opened up in the new budget last week – appears now in almost miraculous fashion.

“This change is, A, brand new,” said Rep. Sean Williams of Watertown, the ranking Republican on the finance panel. “And, B, a change I would call drastic.”

Williams also asked why this $75 million wasn’t disclosed when Malloy and Democratic legislative leaders announced a tentative deal Friday morning.

“We’re talking about a huge number that has been injected into this budget that we never saw before,” Williams said.

Sen. John Fonfara, D-Hartford, co-chairman of the committee, said the administration believes the potential for more tax collections stems largely from last fall’s tax amnesty program, which collected about $190 million by waiving penalties on delinquents.

The budget doesn’t create another new amnesty program, but Fonfara said the Department of Revenue Services learned a lot about how to work with delinquent taxpayers, and believes there is the potential to get more from this group over the next year.

“We think there is still more revenue to be collected,” Fonfara said. “The experience at the Department of Revenue Services this past year is there were people who wanted to pay.”

“They believe there is a reservoir of unpaid taxes that they can relatively easily collect,” added Office of Policy and Management Secretary Benjamin Barnes, Malloy’s budget director.

Fonfara said the administration also believes successful strategies to weed out Medicaid fraud can be used to improve sales tax collections next fiscal year.

Williams told Barnes it was particularly strange that this revenue prediction arrived just in time to help close a major deficit and enable the Democrats to repeal keno, a controversial gambling initiative opposed by a majority of voters in a Quinnipiac University poll earlier this year.

“I hope you can understand why we all look at this and say, ‘This doesn’t seem right,'” Williams told Barnes.

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