Governor Malloy today proposed to revise the two-year, $40 billion state budget lawmakers approved this month by making some additional spending cuts and changes to business taxes.
“We have said since the beginning of the budget debate that the lack of spending control and the tax increases proposed in the approved budget would cause serious and long-term harm to our economy and our ability to keep good-paying jobs in Connecticut,” said Joe Brennan, CBIA president and CEO.
“We are therefore pleased that earlier today Gov. Malloy announced spending reductions and modifications to the tax increases that will hopefully stave off an exodus of jobs from our state.
The $223 million in reduced tax increases would be accompanied by giving the legislature the option to either cut 1.5% in spending from any line item, or grant the governor authority to make the cuts.
The tax changes proposed by Gov. Malloy would:
- Cancel the planned increase in the sales tax on computer and data processing services (from 1% to 2% next year and then to 3% in fiscal year 2017)
- Postpone for one year the mandatory combined reporting system, until January, 2016 (it was to be made retroactive to Jan. 2015)
- Modify the reduction of the cap on state tax credits; the budget lowers the cap from 70% to 50%; the governor is proposing a new cap of 55%
Brennan continued, “We also are encouraged by the Governor’s remarks that we may have further discussions regarding the loss carryforward provisions in the corporate tax, another tax matter that is of serious concern for many employers across the state. We look forward to the opportunity to work with the Governor and the legislature to balance the need to deliver state services with the need for sustained economic growth.”
CBIA will provide more details on the budget and upcoming special session.