Here are the contenders, in chronological order, for the largest state tax hike of the past three decades:
O’Neill tries to stave off the income tax
In an effort to keep a state income tax at bay, Gov. William A. O’Neill and his fellow Democrats in the legislature’s majority bumped the sales tax from 7.5 to 8 percent, ended a host of sales tax exemptions, and increased levies on capital gains and dividends, corporations, cigarettes, liquor and insurance premiums. It didn’t work, which led us to …
… Weicker pours ‘gasoline on a fire’
Despite likening a state income tax to “pouring gasoline on a fire” during the 1990 campaign, Gov. Lowell P. Weicker Jr. reversed himself in 1991 and proclaimed the income tax as the only fiscally honest solution to a massive deficit caused by a recession and a costly program to boost teachers’ salaries. Weicker’s budget also reduced the sales tax from 8 to 6 percent.
Rowland runs into a recession
After enjoying a robust economy for much of his tenure — which led to tax rebate programs in 1998 and 1999 — Republican Gov. John G. Rowland ran into deficits with the recession of the early 2000s. After winning re-election to a third term in November 2002, Rowland signed a budget in 2003 that raise income taxes across-the-board, reduced a property tax credit for the middle class and imposed higher rates on corporations and cigarette sales.
Rell strikes a deal — but won’t sign it
Republican Gov. M. Jodi Rell faced a hailstorm of criticism in 2009 when she proposed a two-year budget that, according to nonpartisan analysts, was a whopping $2.7 billion out of balance. Most of that gap was due to Rell’s extremely rosy revenue projections, just as Connecticut was slipping into what economists labeled “The Great Recession.” After months of holding out, Rell would eventually drop her rosy forecast. [Note: Even more conservative projections would prove too optimistic and Rell would leave a massive deficit behind for Gov. Dannel P. Malloy.] Her administration negotiated with a Democrat-controlled legislature, settling on a new 6.5 percent income tax rate on wealthy households and increases in corporation, cigarette and estate taxes. But to distance herself, Rell wouldn’t sign the budget, allowing it to become law without her signature.
Malloy inherits a $3.7 billion deficit
Malloy spent his first year in office criss-crossing the state explaining that without adjustments, the state’s finances would run almost $3.7 billion in deficit in his first year, a gap equal to more than 18 percent of the General Fund. Malloy and the his fellow Democrats in the legislature’s majority increased income, sales and corporation taxes and established a new levy on hospitals. The hope was this would stabilize state finances for years to come, and that a robust recovery from The Great Recession would do the rest. It didn’t.
Malloy pledges not to raise taxes, … then does
After dismissing nonpartisan warnings that state finances were on pace for another significant deficit after the 2014 election, Malloy pledged as he campaigned for re-election not to raise taxes. In addition, more than $235 million in tax cuts were approved for consumers, businesses, the working poor, single-income tax filers and retired teachers — all of which were scheduled to begin after the election. The governor and Democrat-controlled legislature would cancel or defer all of that relief, except for a tax break for retired teachers, and would raise income tax rates on the wealthy, cut income tax credits for the middle class, and boost levies on corporations and cigarette sales.