CT Budget, Tax Cut Vote Expected Today: What To Know

CONNECTICUT — The state House of Representatives started debate on the budget adjustment package this evening, with a vote possible late tonight. The adjustments could result in about $600 million in tax cuts for Connecticut residents, according to Gov. Ned Lamont’s budget officials.

The tax cuts are the largest in state history, said Office of Policy and Management Secretary Jeffrey Beckham.

The Office of Fiscal Analysis and Gov. Ned Lamont’s budget office projected another $856 million in tax revenue on top of another $1.2 billion that was announced 12 days ago, according to the CT Mirror. All told, the state should have about $3.5 billion that it could use to pay down long-term debt liabilities.

The hope is that the budget bill will run around dinnertime today, House Speaker Matt Ritter (D-Hartford) said in the morning.

“This is not balanced with federal money,” Lamont said at a budget news conference, rather, it was due to higher income and sales tax receipts.

Lamont and legislative Democratic leaders recently unveiled the tax cut package. It includes extending the state gas tax holiday through Dec. 1, an expanded property tax credit, a cap on car taxes and a one-time child tax credit. It also would eliminate state taxes on pensions and qualified annuities, but it was unclear whether that would include 401k withdrawal income.

The state has its largest rainy day fund ever, which will help if there is an economic downturn that results in less tax revenue being collected, Lamont said.

“Nothing is guaranteed in the future and there are some storm clouds out there,” he said. “And I know that this year's surplus does not imply the same for next year. But I want you to know we're operating cautiously, planning for the future.”

Legislators received the budget document early in the morning; several Republican legislators said there wasn’t enough time to review the entire document before voting on it later in the day, according to CT News Junkie.

House and Senate Republican leaders pitched a $1.2 billion tax relief package, which would cut the state income tax from five to four percent for individuals earning less than $75,000 and joint filters earning less than $175,000 annually. It would also reduce the sales tax and eliminate the 1 percent meal surcharge tax through the end of the year.

“Connecticut is overtaxing its residents and the state’s inflation related windfall must be returned to Connecticut families,” Senate Republican Leader Kevin Kelly said in a statement. “Connecticut’s state budget is benefitting from inflation as the state sales tax and gross receipts tax bring in new, unplanned for revenue – a result of surging prices.

The Republican plan also called for putting more money back into the state’s unemployment trust fund, which would help reduce burdens for business owners. Lamont’s proposed budget would put about $40 million back into the fund.

Lamont wasn’t in favor of the Republican proposal because it went against federal American Rescue Plan Act fund use rules, he said. ARPA money would have to be paid back in that case.

Extra funds would better be spent on paying down the state’s long-term pension liabilities instead of shoring up the state unemployment fund, Lamont said. The state borrows at a rate of about 1.5 percent for the unemployment fund. Paying down pension liabilities saves the state about 7 percent.