Gov. M. Jodi Rell acceded to Democrats”™ insistence on higher taxes for corporations and wealthy Connecticut residents, allowing a $37.6 billion budget to become law without signing the bill.
The law enacts a 10 percent surcharge on corporate income, a measure that excludes small businesses, and hikes taxes on individuals making at least $500,000 and couples earning at least $1 million.
The bill also cuts the state sales tax from 6 percent to 5.5 percent next January, if revenue targets are met, which lawmakers hope will help spur consumer spending.
The budget also lowers inheritance taxes in Connecticut by raising the current minimum threshold at which taxes are levied from $2 million to $3.5 million.
The Connecticut General Assembly and Rell remained at odds long past the June 7 close of the official legislative session, with Rell repeatedly rejecting Democrat calls for higher taxes, insisting that the budget could be balanced with spending cuts and finding previously untapped revenue streams from the federal government, unclaimed bottle deposits and other sources.
Democrats hold a veto-proof majority, but some Fairfield County party members did not vote in favor of the budget making a compromise necessary.
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In the end, Rell was forced to admit that her math did not add up, but in the same breath she warned the state”™s economic future could be devastated if taxes are not held in check to the maximum extent possible. She agreed to $900 million in new taxes, then vented bitterness at the budget process and outcome in a prepared statement.
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“Democrats have repeatedly called this budget a compromise,” Rell said. “It is hardly a compromise. Last week I put a new budget proposal on the table ”“Â my fourth ”“Â in which I accepted tax increases I did not want in return for cuts in state spending. The Democrats just could not cut, once again showing they are unwilling ”“ or simply unable ”“ to make meaningful reductions. They refuse to accept the reality that families and businesses accepted months ago: We must live within our means.
“Instead, this budget calls for more borrowing and vague plans for future savings” Rell added. “I will not veto the entire budget. However, I will not sign it into law, because I do not believe in this budget. I do not want, by my signature, to put a stamp of approval on their spending, their inability to make cuts or their levels of borrowing, revenues and taxes.”
In a prepared statement, state senate president Donald Williams Jr. countered that the Democrats wrote $3 billion in spending cuts into the bill that reach every agency and department in state government.
“We make the tax code fairer for working families and the middle class by lowering the sales tax and raising revenues from joint filers making more than $1 million a year and we protect critical investments, like financial aid for college students, that help build Connecticut”™s workforce,” Williams said. “Make no mistake; there is no perfect budget this year: the historic deficit forced us to make tough cuts and very difficult decisions.”
