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Budget Update: Malloy Calls for Tax Hikes, Dems Pledge Vote on Thursday

September 11, 2017 By Staff
Budget Update: Malloy Calls for Tax Hikes, Dems Pledge Vote on Thursday

Catch up on what you need to know about the Connecticut budget process, with the state in the thick of its third month without a budget.

Gov. Dan Malloy (D-Conn.) finally caved to the Democratic demands to raise taxes last week, as the leader of House Democrats pledged a budget vote on Thursday, September 14 – with or without a deal.

Malloy’s support for tax hikes came in Friday’s “compromise budget,” which Malloy claims introduces “systemic budget reforms” and addresses “critical needs.”

COMPROMISE?

However, buried at the bottom of the press release for the proposal is two tax hike announcements:

  • “Raising the sales tax rate to 6.5 percent (keeping it lower than New York, New Jersey, and Rhode Island) and raising the sales tax on restaurants to 7 percent statewide. These two changes result in revenue gains of $87 million in FY18 and $133 million in FY19.”
  • “Revising provider tax provisions and increasing the tax rate to generate additional general fund revenue that will support health care investments and garner $250.7 million in FY18 and $219.8 million in FY19 in federal grant revenue, leveraging an additional $47.2 million in FY18 and $113.1 million in FY19.”

The sales tax hike will have a disproportionate effect on lower- and middle-income families, who pay a higher percentage of their income in sales taxes, and the provider tax will primarily impact hospitals and health care providers.

Malloy also suggested a “progressive” system for funding education in the future, suggesting we’ll see more of what Malloy has already done this year: punish schools in Connecticut’s smaller and wealthier towns, and focus state tax dollars on “struggling” districts instead.

VOTE ON THURSDAY?

Also last week, House Speaker Joe Aresimowicz (D-Berlin) pledged a vote on a budget – compromise or not – by Thursday, September 14.

Republicans leaders have often told Democrats in the state that they have proposed several budgets, less reliant on tax increases, and are ready to vote.

UPDATE, 9:25amThe CT Mirror reported on Monday morning that Democrats in the legislature are talking to Malloy about dropping the sales tax hike, which would keep the rate at 6.35 percent.