Malloy vetoes tax breaks passed on final night of session

Gov. Dannel P. Malloy

CTMirror.org

Gov. Dannel P. Malloy

Gov. Dannel P. Malloy sided with municipalities Thursday and vetoed a bill that would have allowed 100-percent property tax breaks in perpetuity for non-profit and for-profit arts entities, a measure passed without debate in the final two minutes of the 2016 legislative session.

He also vetoed a bill that would have expanded a manufacturing tax break and shifted responsibility for analyzing tax credits offered for economic development from the administration’s Department of Economic and Community Development to the legislature’s Program Review and Investigations Committee. Comptroller Kevin P. Lembo called the veto “deeply troubling” and a blow against transparency.

Malloy said the perpetual and total property tax break for arts and culture entities was excessive, especially since it could be sought by commercial enterprises such as movie theaters. It would be optional for municipalities, but Malloy said it would pressure them.

“While I have been a longtime supporter of the arts and other cultural activities, I do not think the state should be encouraging the exemption of for-profit entities from taxation without limitation,” Malloy wrote in his veto message.

The House voted 125 to 20 to approve the bill two minutes before the legislature reached its constitutional adjournment deadline of midnight May 4, while the Senate passed it on a vote of 35 to 1, with Sen. Eric Coleman, D-Bloomfield, in opposition.

The other bill vetoed passed unanimously in both chambers, with final passage coming in the Senate on the final night of the session. Malloy said in his veto message that he opposed a provision in the measure allowing individual partners or shareholders to potentially claim without limitation a business credit on their personal returns.

“Allowing business tax credits to be claimed against the personal income tax would open the door for other similar proposals and increase the likelihood that the credits will result in a revenue loss to the state,” he wrote in his veto message.

Malloy also wrote that transferring the analysis of tax credits from DECD to Program Review was “unnecessary and unwarranted.”

That drew a rebuke from Lembo, a fellow Democrat who testified at a public hearing in March favor of giving the job to Program Review, a bipartisan committee with a staff of non-partisan researchers and analysts.

“If objectivity really matters, we always want an independent third party to evaluate our work,” Lembo said Thursday in an emailed statement. “This is why teachers grade tests and students don’t just assign their own grades. Furthermore, this is a terrible loss of transparency where we need it most.”

Lembo said the veto, following a decision to provide $22 million in state bond funds to a rich hedge fund over his objection, is “deeply troubling.”

“The state owes it to businesses and all taxpayers to fully analyze the return on investment that these sizable and important programs actually deliver in order to assess whether such resources are fulfilling their intended purpose or, if not, whether state funds would be better deployed to other economic development or infrastructure investment,” Lembo said.

Malloy now has vetoed eight and signed 216 bills passed in the regular session.

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