During the 2012 legislative session, official updates on the state’s tax receipts for this fiscal year continued to disappoint and ultimately lawmakers were forced to deal with a project deficit of about $284.6 million before they adjourned.
Connecticut’s economy is still struggling with the effects of the recession, with a slow recovery as evidenced in the disappointing jobs numbers for April.
The legislature approved a revised, $20.5 billion plan for fiscal year 2013 that covers the gap with a patchwork of fund transfers, borrowing and some spending reductions.
Spending, however, actually increases in the revised midterm budget by $143 million, including new dollars for education reform measures. The budget increases spending over original appropriations by 1.6% and is under the spending cap by $142.3 million.
Approval of the revised budget was mostly along party lines, with Democrats supporting and Republicans opposing (with one exception in the Senate). In a special session this summer, the legislature is expected to adopt a bill to revise to the budget.
Unfortunately, much of the revisions adopted to patch the budget gap are raids on other state funds that could lead to additional shortfalls in the future. Next year, the General Assembly will have to tackle a new, two-year state budget that state officials say is already heading for a larger deficit.
Good fiscal news that came in after the session was that Connecticut has been able to trim $13.3 billion off the state’s future unfunded state employee and retiree healthcare liabilities.
Healthcare cost controls implemented across state government over the last few years and changes in the state’s agreement with its employee unions have helped produce the positive results.
Given last year’s significant increases, there was less legislative activity this year on taxes. Property taxes were the biggest issue, with several municipalities seeking changes to their property tax structures—mostly centering on delaying or the implementation of municipal revaluations.
Lawmakers adopted HB 5424, which allows Stamford, Norwich, Windham, New Britain and Farmington to delay the next scheduled revaluation for the 2013 assessment year.
While several municipalities failed in efforts to change revaluation process laws, some of them are expected to try to secure approval of some modification during the upcoming special session.
CBIA will continue to work to ensure that all properties are assessed at the 70% rate and that revaluations are conducted in a timely manner.
Two other measures that passed were HB 5035, which states that partial structures are subject to property tax, and PA 12-4, which caps the state’s gross earnings tax on petroleum products (including gasoline).
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or email@example.com.