A $250-per-child state tax rebate for as many as 350,000 poor and middle class families is the latest Connecticut pandemic relief plan struggling to hit its mark.
With less than two weeks before the program’s July 31 deadline, only about half of the estimated, eligible households have applied for assistance, according to the state Department of Revenue Services. Through mid-afternoon Tuesday, the department had received 165,621 applications from families — on behalf of 258,819 children.
But program advocates are confident applications will surge in the final two weeks as they pledge to intensify outreach efforts.
“We are doing whatever we can … to make sure people know they’re eligible for this, and that they have to sign up,” said Rep. Sean Scanlon, D-Guilford, co-chairman of the legislature’s Finance Committee. “I think it’s really just about leaving no stone unturned.”
Scanlon has been pushing for the past two years for a yearly state income tax break for working families with kids.
The full legislature and Gov. Ned Lamont settled instead on a one-time child tax rebate of $250 per child — up to a maximum of $750 per household. Lamont also said he would prioritize converting the rebate into an ongoing credit during the regular 2023 General Assembly session if state finances remain strong at that point.
“We are quickly approaching the July 31 deadline to apply for this state tax rebate, and we strongly encourage all families who’ve claimed at least one dependent on their 2021 federal income tax returns to submit their applications to the Department of Revenue Services as soon as possible so that they can take advantage of this opportunity,” Lamont spokesman David Bednarz said.
Republicans have accused Lamont and his fellow Democrats in the legislature’s majority of using the rebates as a political stunt to boost their campaigns this fall. Lamont is seeking a second term as governor, and Scanlon is running for state comptroller.
The rebate is available for single parents who earned $100,000 or less and for couples who make $200,000 or less. Households must file a 2021 federal income tax return to receive the benefit.
When the program launched in June, state officials estimated 350,000 households were eligible. But that projection was based on 2020 income tax data, Revenue Services Commissioner Mark Boughton said Tuesday, adding that revised projections are closer to 300,000.
The child tax rebate is supposed to deliver $125 million to working families. Based on applications received to date, it would deliver $64.7 million.
It’s also not the first state relief program to run into trouble getting dollars out the door.
Connecticut launched a $34 million program in January to replace lost wages and cover medical expenses for frontline workers who caught COVID.
But as of early July, slightly more than $361,100 or 1.1% of the program funds had been awarded amidst complaints of a low profile and a complicated application process.
Lamont and his fellow Democrats in the legislature’s majority say their overall tax relief plan, which would top $660 million — if all programs run as projected — is one of the largest in state history.
Besides the child tax rebate, it also includes: one-time payments of federal aid to the working poor; a suspension of the 25-cents-per-gallon retail gasoline tax until Dec. 1; an ongoing expansion of the property tax credit within the state income tax — from $200 to $300; and a statewide freeze on car taxes at 32.46 mills.
Republicans counter it is far too little given the context. The national inflation rate, which now exceeds 9%, is at a 40-year-high. And for the fiscal year that just wrapped on June 30, preliminary numbers show the state finished with an unprecedented surplus of around $4 billion.
The GOP favored a $1.2 billion relief plan that also included a state income tax rate cut for the middle class; a holiday on diesel fuel taxes; a temporary reduction of the sales tax from 6.35% to 5.99% in 2022; and suspension of the 1% surcharge on restaurant meals for the rest of the calendar year.
“I’m saddened that the administration hasn’t done a good enough job rolling out this assistance we all supported,” Senate Minority Leader Kevin Kelly, R-Stratford, said Wednesday. “We are always in favor of reducing the tax burden on Connecticut families. Our Better Way proposal offered a much wider range of immediate tax relief for families, seniors, and job creators across Connecticut.”
But Boughton noted that the state’s periodic tax amnesty programs — which also require filers to apply to receive assistance — traditionally see a last-minute surge in participation. The child tax rebate program could follow this same pattern.
“We’re seeing 1,500 to 2,000 [applications] per day,” he added. “We’re going to push right up to the July 31 cut-off.”
The Department of Revenue Services’ website enables households to apply online at https://portal.ct.gov/DRS/Credit-Programs/Child-Tax-Rebate/Overview. Applicants also can call the DRS at 860-297-5962.
The United Way of Connecticut, which has pushed for state tax reform and promoted the rebate heavily this summer, also is stepping up its efforts during the home stretch run.
Lisa Tepper Bates, president and CEO of the United Way of Connecticut, said she fears many rebate-eligible households may not be applying because of confusion tied to federal tax relief.
Congress enhanced the federal child tax credit last year in response to the economic pain of the coronavirus pandemic, sending relief directly to many families’ bank accounts — with no immediate application process.
But that program was piggy-backing off of an established, ongoing child tax credit program within the federal income tax system. Congress opted to rely on already existing data to identify households that had received the credit in the past and send them the enhanced aid.
The United Way has created information kits not only to help households apply for the grant, but also to enable businesses to assist their employees in learning more about the relief program. Bates said residents can learn more about the program by calling the United Way’s 2-1-1 infoline.
Both Scanlon and Bates said Connecticut could have looked into an application-free option when state officials ordered the rebate in May. But assembling that data might have delayed relief efforts. The state hopes to send rebate checks to approved applicants starting in August.
Still, both Scanlon and Bates said the state should consider this option the next time to maximize the number of households that benefit.
“The way the federal government managed the enhanced child tax credit had a rapid and profound impact on the level of child poverty in this nation,” Bates said. “We know that simpler, direct delivery system has a lot of power to it.”
Scanlon said he expects more than 60% of eligible households will have signed up for a rebate before July 31, adding that still is “an astonishing application rate.”
Nonetheless, he added, “I think we’ve learned a lot from this process. If we can figure out a way not to have an application [in the future] I think it’s going to be even more of a success.”