The General Assembly last week approved a two-year, $37.7 billion budget proposed by legislative Democrats that would increase state taxes by $2.5 billion—including a three-year, 25% surcharge on the corporation tax and an increase in the personal income tax for certain individuals earning $250,000 or more.
Gov. Rell said she will veto the proposal because it fails to reduce the size or cost of state government and does not do what residents and businesses throughout Connecticut are doing—cutting back. The state continues to face a nearly $1 billion budget deficit this year and more than $8 billion gap for the next two fiscal years.
In addition to the corporate tax surcharge and income tax hike, the Democrats’ budget also:
- Increases the preference tax for companies electing combined reporting from $250,000 to $400,000
- Increases state fees by $125 million
- Imposes a three-year, 30% increase on the estate and gift tax on those with estates worth $2 million or more
- Raises the cigarette tax by 75 cents per pack
CBIA also continues to urge lawmakers to do more to make state government less expensive and more efficient before considering the possibility of tax increases. The state needs to do all it can to help employers create and save jobs, and position Connecticut’s economy for recovery and renewed growth.
It is a good development, however, that some of the most potentially harmful tax measures were taken out of the Democrats’ proposal, including a previously proposed elimination of sales tax exemptions and further limits on the use of all tax credits.
Lawmakers and the governor’s office have gone back into negotiations on the budget.
Prior to the budget action, the General Assembly approved a measure (HB-6901, special session) to improve the quality of public education by making it easier for mid-career professionals to become teachers via the state’s Alternate Route to Teacher Certification program. The measure also provides additional help for certain charter schools in the state.
Also approved by the legislature last week was a bill (SB-2001, special session) that:
- Makes federal stimulus funds available for summer jobs and worker training programs
- Provides additional funding for certain state programs (such as Medicaid, magnet schools, UConn Health Center and Department of Corrections) for this fiscal year
- Cuts overall state spending this fiscal year by about $81.5 million
- Decouples state and federal corporate taxes when cancellation of debt income is concerned
For more information, contact Bonnie Stewart at 860-244-1925 or firstname.lastname@example.org.