BY KEN DIXON
Hearst Connecticut Media
Single residents earning more than $250,000 and couples making more than $500,000 would see higher income taxes under a budget deal struck by Gov. Dannel P. Malloy and fellow Democrats in the General Assembly early Sunday morning after weeks of closed-door negotiations.
The budget, if approved as expected Monday in the House and Senate, would also put a state cap on car taxes, giving relief to residents of the highest taxed cities and towns, while reimbursing municipalities for the lost tax revenue. The plan also would divert some sales tax revenue to fund Malloy’s ambitious transportation infrastructure overhaul.
The deal, which will face Republican opposition against the Democratic majorities in the House and Senate, was generally kept under wraps Sunday until rank-and-file members could see further details Monday.
Nonetheless, Republicans quickly pounced on the plan.
Senate Minority Leader Len Fasano, R-North Haven, warned that the taxing and spending is too high.
“Despite what we have been promised, despite the rhetoric we have heard from the governor, Connecticut is putting a damper on potential for job growth and fiscal stability,” Fasano said. “This budget represents broken promises and a complete disregard for the warnings made very clear over the past few months. Connecticut cannot afford new taxes. No one wants to see people leave our state, but I fear this budget will be the last straw for many.”
Sen. Michael McLachlan, R-Danbury, urged his constituents to call the Democratic leadership Monday and leave a three-word message: “No new taxes.”
Sources with knowledge of the tax increase details said couples with incomes over $500,000 would see their current 6.7 percent tax rate rise to 6.8 percent. Couples with incomes over $1 million would be assessed at 6.99 percent. Single filers earning more than $250,000 would pay the 6.8 percent rate and singles earning more than $500,000 would pay the 6.99 percent rate.
Those making half a million dollars or more paid $3.14 billion in income taxes in 2013. The increase would raise another $200 million in revenue over the biennium, but the tax rates would still be lower than the wealthy pay in neighboring New York.
A proposal in last month’s Democratic budget that would have added a 2 percent surcharge on capital-gains for high earners apparently was cut out of the final budget package.
A break for city drivers
The current local property tax on motor vehicles, which varies wildly from one municipality to another and is generally much higher in the big cities, would be capped at 32 mills starting July 1 and lowered to 29.36 mills in the fiscal year starting July 1, 2016.
Spending would increase about 4 percent over the current fiscal year, which ends June 30.
Last month, Democrats proposed spending $605 million more than Malloy, but the negotiations cut that by at least $130Â million.
The two-year, $40 billion spending-and-tax package would have additional funding for charter schools in Bridgeport and Stamford and a variety of municipal aid, including a new structure for payments in lieu of taxes for cities such as Bridgeport, Danbury, Stamford and Greenwich that host tax-exempt hospitals and institutions of higher learning.
Transportation funds
Revenue from 1 percent of the 6.35 percent sales tax would be split evenly to invest in municipal aid and fund the initial stages of Malloy’s 30-year, $100 billion transportation infrastructure plan, for which a record investment would be set aside.
The deal includes a $2.8 billion increase for infrastructure over the next five years for a total of about $10 billion over that period using the budget, long-term capital borrowing and federal sources.
Malloy’s office said on Sunday afternoon that the agreement means the state will invest $613 million for highways, $281 million for bridges, $101 million for bicycle and pedestrian trails, and $43 million ”“ or a 25 percent increase ”“ for buses.
“Working with House and Senate leaders, we were able to come to this historic agreement where we fund transportation for nearly a decade and provide car tax and property tax relief,” Malloy said in a statement. “With the transportation component to the agreement, this will truly be a historic budget. We’re able to make the biggest investment in transportation ever ”“ and we’re able to achieve that without burdening the middle class. We shouldn’t stand for 100-year-old bridges and 42 hours per year in traffic on average for every man, woman, and child.”
Avoiding new service taxes
The budget plan would inaugurate keno, the continuous lottery viewed on video monitors in restaurants and bars, and retain surcharges on corporate taxes.
Malloy proposed his budget in February, but Democratic lawmakers proposed an alternative last month that included higher taxes on the state’s wealthiest earners and a wide variety of new sales taxes on services from construction to veterinarians, accountants, dry cleaners, architects and accountants. Malloy opposed the sales-tax expansion.
Senate Majority Leader Bob Duff of Norwalk said the deal will help the middle class.
“This budget has major property tax relief for Connecticut’s families by sharing sales tax revenue with local communities.” Duff said. “Additionally, this budget supports our people, our business sector and makes significant long term investments in our transportation system.”
Fasano opposed Malloy’s quest to include new charter schools and urged Democrats to vote against the budget.
“Favoring hefty funding for new charter schools in this budget at a time when our existing schools need help makes no sense,” he said. “Priorities here are all wrong. Democrats should not feel obligated to vote for this budget.”
Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News-Times (Danbury). See ctpost.com for more from this reporter.
