Governor, Democrats Agree on Budget Package

Governor Malloy and Democratic state lawmakers have reached agreement on a spending and tax package for the next two fiscal years.

Details on the spending side of the proposal are still emerging, but it increases taxes by $1.9 billion and assumes the $1 billion in each year in state employee concessions being negotiated by the governor.

The Democrats’ budget increases the personal income tax to a maximum 6.7% rate andincreases the state’s sales tax to 6.35%, applicable to all taxable sales.

Here is a table (pdf) of how the income tax would change under the proposal.

The proposed “throwback” tax that would have impacted Connecticut manufacturers and businesses that export goods and services is eliminated.

In addition, the corporate income tax surcharge is increased to 20% for income years 2012 and 2013, and the budget increases the electric generation tax proposed by the governor, sunsetted after two years.

For additional information about the tax package:

• Line-item document distributed by the governor and Democratic legislative leadership
• More detailed fiscal and legislative analysis

On Monday, CBIA will provide a follow-up report on the budget and tax plan approved by the Finance and Appropriations committees.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.