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With the state projected to be operating on a near $1.5 billion surplus, the Democratic governor announced his first package of proposals, which includes $336 million in tax cuts if approved.
“The governor said that he is proposing the tax cut package as the state is projecting an operating surplus of $1.48 billion, which will enable a significant reduction in the one-time revenues built into the enacted budget and will continue to ensure the state has a strong rainy day fund,” state officials said in a statement.
“When I took office three years ago, Connecticut had a $3.7 billion deficit with projected deficits for many years to come, and for the sake of our economic future I made it a commitment to turn that instability around and strengthen our state’s fiscal health,” Lamont said.
“Today, Connecticut has a surplus, and we did it without broad-based tax increases, and while making a historic investment in our pension obligations and leaving the rainy day fund untouched.
"Connecticut’s fiscal health is stronger than it’s been in decades, and now we can move toward the next phase of the Connecticut comeback – cutting taxes for the people who live here.”
Lamont’s tax cut plans includes five parts:
- Restore full eligibility for the property tax credit (expected to impact approximately 500,000 people) by restoring full eligibility for the property tax credit in 2022. Previously, the credit was limited to those over the age of 65 or those with dependents;
- Increase the property tax credit from $200 to $300 (expected to impact 1.1 million people), costing the state an estimated $70 million;
- Accelerate the planned phase-in of the pensions and annuities exemption from income taxes (expected to impact 250,000 people by moving the plan up three years from 2025 to 2022;
- Expand student loan tax credit, which would “leverage business expenditures alongside the state tax credit to significantly expand eligibility to all loans issued by the Connecticut Higher Education Supplemental Loan Authority,” retroactive to Saturday, Jan. 1;
- Reduce motor vehicle property tax on nearly two million vehicles, as well as lowering the mill rate cap on motor vehicle property taxes from 45 mills to 29 mills and reimburse local governments for the revenue impact that comes from it.
“I asked our budget analysts to run some numbers to determine how we can cut taxes in a realistic way that won’t negatively impact the strong fiscal standing we’ve created, while targeting those cuts for those who can benefit most,” Lamont added.
“I’m hopeful that the legislature will agree that these cuts can provide relief, and this package can be the first in a series in the coming years as we continue bringing Connecticut’s fiscal stability on more and more solid ground.”
Not all lawmakers were pleased with Lamont’s proposed ambitious budget, with Senate Republican Leader Kevin Kelly issuing a statement damning Lamont’s proposal while calling for other reform.
“It must be an election year since Democrats are talking about tax cuts. Unfortunately, there is no actual relief here until next year,” he said. “Connecticut absolutely must look to reduce taxes on residents and make our state more affordable for middle-class families. Republicans have long called for relief when it comes to property taxes and taxes on pension in particular.
“But we also need immediate relief. Inflation right now is crushing family budgets,” Kelly continued. “We must reduce the sales tax now. Promises for future tax credits are welcome, so long as they can be delivered. But we cannot ignore that what families are calling for is real relief now.”
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