Bud­get likely to cost res­i­dents

Mix of fees and taxes will be used to bal­ance state bud­get

The Register Citizen (Torrington, CT) - - FRONT PAGE - By Chris­tine Stu­art CTNewsJunkie.com

HART­FORD » Af­ter months of missed dead­lines and weeks of un­cer­tainty, the leg­is­la­ture’s Fi­nance, Rev­enue, and Bond­ing Com­mit­tee adopted a two-year rev­enue pack­age that es­tab­lishes a cell­phone tax, re­duces a pop­u­lar mid­dle class tax credit, cre­ates a statewide prop­erty tax on sea­sonal homes, and in­creases taxes on ho­tels and hos­pi­tals.

Democrats, who hold a onevote ma­jor­ity over Repub­li­cans on the com­mit­tee, voted 2625 in fa­vor of the rev­enue es­ti­mates over the ob­jec­tions of the mi­nor­ity party.

Repub­li­can law­mak­ers ob­jected to the tax and fee in­creases, but promised with hours of de­bate ahead of them to keep their com­men­tary and ques­tions short.

Sen. L. Scott Frantz, R-Green­wich, said Con­necti­cut’s brand is hurt­ing.

“The bud­get, in gen­eral, is a com­men­tary on the health and

the lead­er­ship of the state,” Frantz said.

“This rev­enue plan is an in­di­ca­tion that we’re des­per­ate,” he added, cit­ing the 49-cent cell­phone tax as an ex­am­ple.

Frantz said the statewide prop­erty tax on a sea­sonal home will be an “un­mit­i­gated dis­as­ter” like it was in Ver­mont. He said Ver­mont’s real es­tate mar­ket still hasn’t re­cov­ered.

He said he doesn’t know where the state even got an es­ti­mate on tax­ing va­ca­tion homes. The Of­fice of Fis­cal Anal­y­sis said that it would gen­er­ate $32 mil­lion a year.

An in­crease in the real es­tate con­veyance tax that was pro­posed as part of Gov. Dan­nel P. Mal­loy’s com­pro­mise bud­get last week was not in­cluded in the pack­age. That tax would have

raised about $50 mil­lion in the first year and $77 mil­lion in the sec­ond year of the bud­get.

Over the ob­jec­tions of mu­nic­i­pal­i­ties, the pack­age also in­cludes a shift in teacher re­tire­ment costs to mu­nic­i­pal­i­ties. The change in how those costs are funded would gen­er­ate about $91.9 mil­lion for the state in 2018 and $189.7 mil­lion in 2019.

Mid­dle class home­own­ers would also lose $100 of the $200 prop­erty tax credit. The re­duced $100 credit would only ap­ply to home­own­ers over the age of 65 or those with de­pen­dents.

Cig­a­rette taxes would in­crease 45 cents per pack, but there would still be no tax on va­p­ing, also known as “e-cig­a­rettes.”

A broad-based sales tax in­crease and an en­hanced sales tax on food and bev­er­ages sold by restau­rants was scrapped in the ne­go­ti­a­tions

Demo­cratic leg­isla­tive lead­ers had with Mal­loy.

The ho­tel tax will in­crease 1.75 per­cent, to 16.75 per­cent. The 1.75 per­cent in­crease is ex­pected to help with tourism mar­ket­ing.

The pack­age also in­cludes an in­crease in the hos­pi­tal tax. But the Con­necti­cut Hos­pi­tal As­so­ci­a­tion, which has pre­vi­ously op­posed the tax, said it sup­ports the in­crease.

“Specif­i­cally, the agree­ment would lever­age and max­i­mize fed­eral fund­ing at no cost to the state or tax­pay­ers,” Jen­nifer Jack­son, CEO of the Con­necti­cut Hos­pi­tal As­so­ci­a­tion, said. “Hos­pi­tals would re­ceive statu­tory as­sur­ances that the state would en­sure that they re­ceive funds. At the end of the bi­en­nium, the hos­pi­tal tax would be re­duced.”

The pack­age also es­tab­lishes a 25-cent tax on rideshar­ing ser­vices such as

Uber and Lyft, and cre­ates a daily fan­tasy sports tax.

The bud­get pro­posal the Gen­eral Assem­bly will de­bate Thurs­day and Fri­day is ex­pected to cre­ate a Trans­porta­tion Au­thor­ity to at some point in the fu­ture in­stall elec­tronic tolls, but rev­enue from the pro­posal is not in­cluded in the next two years of the bud­get.

House Speaker Joe Ares­i­mow­icz, D-Ber­lin, who watched the Fi­nance Com­mit­tee’s de­bate, said the bud­get strikes the right bal­ance be­tween spend­ing cuts, ef­fi­cien­cies, and “mod­er­ate in­creases in fees.”

He said the bud­get doesn’t in­clude any broad­based tax in­creases, such as sales or in­come tax in­creases.

“Ev­ery­thing costs more money,” Ares­i­mow­icz said. “My electric bill is higher than it was four years ago. My food bill is higher than it was four years ago.”

He said to bud­get in a

way that ig­nores costs are go­ing up “just isn’t re­spon­si­ble.”

He said when the state grows the econ­omy, leg­is­la­tors won’t have this fight any­more about what ser­vices to cut and which fees or taxes to in­crease.

In­creas­ing debt and pen­sion obli­ga­tions along with plum­met­ing in­come tax re­ceipts cre­ated the two-year, $5.1 bil­lion hole. In July, in a mostly party line vote, law­mak­ers re­solved part of the deficit by ex­tend­ing the state’s la­bor agree­ment un­til 2027, sav­ing Con­necti­cut $1.57 bil­lion over the next two years.

How­ever, for the past 11 weeks, Democrats, who hold a slim ma­jor­ity over Repub­li­cans, were un­able to find the right mix of spend­ing cuts and tax in­creases to close the $3.5 bil­lion deficit and get the nec­es­sary votes to pass a bud­get.

Af­ter spend­ing most of the sum­mer talk­ing with Repub­li­can leg­isla­tive lead­ers, Democrats de­cided last week to ne­go­ti­ate with Mal­loy, end­ing any hope of a bi­par­ti­san bud­get so­lu­tion.

Mal­loy en­cour­aged leg­is­la­tors in a state­ment to swiftly adopt the pro­posal so he can sign it.

“The ur­gency of the present mo­ment can­not be over­stated,” Mal­loy said in a state­ment. “It is crit­i­cal that a re­spon­si­ble bud­get is passed by the Gen­eral Assem­bly, one that pro­vides greater pre­dictabil­ity and sta­bil­ity for the peo­ple and busi­nesses of Con­necti­cut. Lo­cal gov­ern­ments, com­mu­nity providers, par­ents, teach­ers and stu­dents – all of them are best served by pass­ing a bud­get, and pass­ing it now.”

CHRIS­TINE STU­ART / CTNEWSJUNKIE

State Sen. John Fon­fara, state Sen. L. Scott Frantz, and state Rep. Ja­son Ro­jas lead the Fi­nance, Rev­enue and Bond­ing Com­mit­tee Thurs­day.

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