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CT Democrats Push Governor to Raise Spending and Taxes

Credit: Ned Gerard / Hearst Connecticut Media

As Connecticut Gov. Ned Lamont crafts a budget plan to close deficits exceeding $1 billion in the next two fiscal years, a coalition of Democratic lawmakers is pressuring him to raise taxes to help residents struggling financially during the pandemic.

February 7, 2021

A group of progressive Democratic lawmakers last week called on the governor, also a Democrat, to declare a fiscal emergency, and proposed a $3 billion legislative package of new spending on education, property-tax relief, a one-time stimulus payment of $500 for people who lost their jobs during the pandemic, and other measures.

Lawmakers proposed paying for these new spending items by raising taxes on the wealthy and on corporations to produce more than $4 billion in new revenue annually. The proposal includes establishing a 5% surtax on capital gains for individuals making more than $500,000 annually and raising the state’s top income-tax bracket to 12.696%, the second highest in the nation after California.

State Rep. Robyn Porter, a Democrat, said middle-class and working-class families continue to need financial help amid the economic downturn, and it was time for the wealthy and corporations to pay their fair share to society.

“This is about equity. This is about building a strong economy where each and every one of us can thrive,” Ms. Porter said. “Extraordinary circumstances call for extraordinary measures.”

Mr. Lamont, who campaigned on holding the line on taxes, is preparing to release his budget plan Wednesday. He has the option of tapping the state’s rainy-day fund of more than $3 billion to avoid painful spending cuts.

Last month, the state’s income-tax and sales-tax revenue projections came in better than expected. That shrank the deficit by more than $800 million in each of the next two fiscal years, giving the governor’s budget team more room to maneuver.

“We have the largest rainy day-fund in history that is there just to make sure we don’t have to raise taxes and cut social services during an emergency or during a recession. We are prepared for where we are right now,” Mr. Lamont said at a news conference Feb. 3. “I don’t think this is any time to be talking about great big tax increases.”

The idea of raising income taxes on the wealthy has gained steam in the tri-state area recently. Lawmakers in New Jersey raised taxes on millionaires last year. New York Gov. Andrew Cuomo recently proposed to increase taxes on the wealthy if the federal government doesn’t give the state enough money to make up a revenue shortfall stemming from the pandemic.

Democrats control both chambers of the legislature in Connecticut, and Mr. Lamont will need support from his party to pass a budget. State Rep. Kate Farrar, who supports the package of new spending and taxes, said this proposal was part of the group’s first outreach to the governor in hopes they can find common ground.

“The governor has often said he welcomes ideas and solutions,” Ms. Farrar said. “We wanted to put forward a package that could be a real proposal to keep the conversation going to make sure we are having this true vision of how all of Connecticut residents can recover.”

Some Democratic leaders want to wait and see if the state gets more federal assistance before raising taxes. Matt Ritter, the Democratic speaker of the House of Representatives, said the state needs to make investments in education, housing and health care, but he expects the federal government to provide the state with significant financial help.

“Federal support combined with the fact that right now our revenue picture is very positive puts us in a strong position,” Mr. Ritter said in a statement. “However, if we get to April and we find that revenues have dropped and the feds haven’t provided the resources we need, then progressive tax reform is certainly something that needs to be on the table.”

Former Gov. Dannel Malloy and the Democratic-controlled legislature raised income taxes in 2011 and 2015 to help close budget holes. But those increases, which helped drive down Mr. Malloy’s popularity in the state, didn’t fix Connecticut’s long-term budget problems.

Lobbying groups that represent businesses said the tax increases hurt the state’s reputation. Eric Gjede, vice president of government affairs at the Connecticut Business & Industry Association, said the organization was incredibly disappointed to see more proposals for tax increases from Democrats.

“To come out and call for more destructive tax increases is simply astounding,” Mr. Gjede said.

House Republican Leader Vincent Candelora said raising taxes again risks stifling economic growth in the state. It could also force the wealthy to leave the state, he said.

“That’s a real concern,” Mr. Candelora said.


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