New CT budget would feature tax and fee hikes worth $1B over 2 years

CTMirror.org file photo

Sen. John Fonfara, D-Hartford

The two-year state budget the Senate is scheduled to debate Wednesday evening relies on tax and fee hikes worth just over $1 billion over the biennium.

The Finance, Revenue and Bonding Committee adopted a new revenue schedule in anticipation of that debate that reflects those tax increases.

The committee plan also anticipates sweeping $87.5 million per year from energy conservation funds, much of which are supported by surcharges on consumers’ monthly utility bills. Those sweeps include $14 million taken annually from the Green Bank program, which uses the money raised from consumers to leverage much larger private investments.

The revenue schedule was adopted by a vote of 33 to 2 with 16 committee members absent, many of them Republicans. The chairs held the vote open until the Senate convenes so those absent could vote.

The finance panel doesn’t adopt specific revenue changes. But the schedule was based on a series of tax and fee hikes that would raise $494 million this fiscal year and $535 million in 2018-19.

The single-largest hike, a $344 million tax increase on hospitals, would be returned in full to the industry — plus more — to leverage hundreds of millions in new federal Medicaid reimbursements.

If that tax hike is not counted, the overall increase falls to $150 million this fiscal year, $191 million in 2018-19, or $341 million over the biennium.

“I’m proud of this day,” said Sen. John Fonfara of Hartford, the Senate Democratic chair of the committee, who praised lawmakers who participated in bipartisan budget talks. “I witnessed the sincerity in what went on, on both sides. I’m proud to be a legislator here in Connecticut.”

Keith M. Phaneuf / CTMirror.org file photo

Rep. Christopher Davis, R-Ellington

Rep. Chris Davis of Ellington, ranking GOP representative on the committee, said “there’s always give and take” when reaching a bipartisan compromise on a difficult budget.

Analysts say state finances, unless adjusted, will run $1.6 billion in deficit this fiscal year and $1.9 billion in the red in 2018-19.

Other tax increases in the plan include:

  • $90.3 million to be raised annually by scaling back income tax credits for middle-income and working poor filers.
  • A 45-cents per pack increase in the cigarette tax and a related increase on levies for snuff and other tobacco products.
  • $10 million to be raised in 2018-19 by reducing tax credits to be identified later by the legislature.
  • And restoration of an earlier proposal to tax fantasy sports betting, beginning in the 2018-19 fiscal year.

“It’s more important to me what we were able to accomplish in this budget,” Davis said, citing several tax cuts.

These include:

  • Phasing new federal estate tax exemption levels into the Connecticut estate tax starting in 2018-19.
  • Increasing the state income tax exemption for Social Security earnings and creating a new one for certain annuity and pension earnings in the second year of the new budget.
  • Lowering the insurance premium tax rates, which would cost the state $11 million in the first year and $24 million in the second.

Davis added that he also is pleased the legislature scrapped earlier proposals to create a new state property tax on second homes and to add new surcharges on restaurant transactions and on cell phone bills.

CTMirror.org file photo

Sen. Len Suzio, R-Meriden

Sen. Len Suzio, R-Meriden, opposed the package, saying it is too similar to past flawed budgets that relied on tax hikes.

“It’s just a repeat of the mistakes the legislature has been making for the past umpteen years,” he said. “I will not be a part of it.”

Sen. Toni Boucher, R-Wilton, who also opposed the revenue schedule because of the related tax hikes, objected to sweeping consumer surcharges paid to support energy conservation and using those dollars to support the General Fund.

“That’s just downright wrong,” she said.

About Keith M. Phaneuf

Keith, with Jacqueline Rabe Thomas, won first prize in investigative reporting from the Education Writers Association in 2012 for a series of stories on the Board of Regents for Higher Education. The former State Capitol bureau chief for The Journal Inquirer of Manchester, Keith has spent most of 24 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut's transportation and social services networks. A former contributing writer to The New York Times, Keith is a graduate of and a former journalism instructor at the University of Connecticut. E-mail him at kphaneuf@ctmirror.org.

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