Lamont: Budget on ‘5 yard line’

Governor says negotiators are near agreement on taxes and spending

HARTFORD – Gov. Ned Lamont said Friday that top negotiators are “on the 5 yard line” as they are close to reaching a final agreement on taxes and spending as they craft the two-year, $43 billion state budget.

Lamont and top legislators expressed confidence that a final deal could be struck by the end of the legislative session on June 5. But any agreement by the negotiators is subject to approval by the full House of Representatives, the Senate, and Lamont.

“I think we’re very close, but as people point out to me, the first 95 yards on the football field are as tough as the final 5 yards,” Lamont told reporters Friday outside the Capitol. “We’re 5 yards to go, and I think we’re going to get there.”

The outline of a tentative deal, which is subject to approval by rank-and-file legislators, calls for legislators to drop one of their biggest proposals — placing a 2 percentage point surcharge on capital gains for the state’s richest residents.

In return, Lamont would drop his plans for a tax on soda and other sugary beverages, as well as dropping a controversial move to have cities and towns pay for part of the costs of teachers’ pensions, legislators said. The soda tax and teachers’ pensions have been among the most unpopular proposals at the Capitol this year.

Since the wealthy would benefit from

avoiding the increased capital gains tax, Democrats are pushing for a so-called “mansion tax” on the sale of homes above $2.5 million. The state currently imposes increased conveyance taxes on homes worth more than $800,000, but that number would more than triple under the proposal. In addition, taxes would be increased by about $50 million in each of the next two years on pass-through entities, such as limited liability corporations, that are generally paid by wealthy residents, officials said.

Democrats are also calling for a fee of 10 cents on plastic bags that would raise about $30 million in the first year. But Lamont’s original plans for imposing the state sales tax on legal, accounting, engineering, and other services would be dropped. The legislature’s finance committee had previously rejected many of Lamont’s salestax proposals.

Regarding whether a final agreement can be reached in the days following Memorial Day, Lamont said, “I sure hope so. The number one promise I made to people is I’m going to do everything I can, within my power, to get you an honestly balanced budget, on time. Every mayor and superintendent I talked to said, ‘Even if we don’t get as much money as we want, get it to us on time so we can plan accordingly. Make sure the assumptions are conservative enough so we don’t have to change halfway through the year.’ ‘’

Lamont has been under pressure from fellow Democrats to support a 2 percentage point surcharge on investment income to raise $262 million per year to balance the budget. After receiving a letter from 63 House and Senate Democrats who favor the tax increase, Lamont said he has not changed his position on the capital gains rate, which is paid through the state income tax. The top rate on capital gains would go to 8.99 percent, up from the current maximum of 6.99 percent, for couples earning more than $1 million per year.

“That is sending the wrong message,” Lamont said Friday of a proposed tax hike. “This is a state that’s going to grow and be a place of opportunity … and I’ve got to give people some confidence that we can live within our means.”

Democrats are also pushing to maintain the hospital tax, which is a complicated financing mechanism that generates increased federal funds and then sends money back to the hospitals. But the hospitals say that they have not received enough money back from the arrangement, and they are still involved in a civil lawsuit against the state that started under the administration of then-Gov. Dannel P. Malloy. Both Lamont and Democrats have been calling for the hospital tax to remain at the same level as the current f i scal year at

$900 million.

Senate Republican leader Len Fasano of North Haven said that Republicans would back up Lamont in a move to block an increase in the capital gains rate.

“I don’t think that a capital gains budget would pass the Senate,” Fasano said. “That’s just a guess. … I think the conservative and moderate Democrats in the House may have some issues with this.”

So far, only 7 of the 22 Democrats in the Senate have signed the letter supporting the capital gains hike. Fasano warned that, in more than 15 years in the legislature, he has seen tentative agreements that have blown up after being shown to rank-and-file legislators.

Senate President Pro Tem Martin Looney, a New Haven Democrat who has served in the legislature for more than 35 years, said, “I think we’re quite close. I’m confident that we can get it done prior to June 5. The overall package is likely to be done prior to adjournment.”

Spokesmen for both the Senate Democrats and the House Democrats said Friday that no final budget deal had been reached yet.

Speaking to reporters Friday, Lamont said that he plans to sign key bills on raising the minimum wage and enacting gun control. Despite complaints from Republicans and some businesses, Lamont favors the hotly debated bill that will raise the state’s minimum wage in annual increments before reaching $15 per hour in 2023. The signing will likely be on Tuesday or Wednesday, he said.

“It’s an important bill,” Lamont said. “We’re ready to sign it.”

After Memorial Day, Lamont says he intends to sign three bills on gun control that we passed by both chambers of the legislature.

The most high-profile of the gun bills was Ethan’s Law, named after a Guilford teenager, Ethan Song, who accidentally shot and killed himself last year at his friend’s house. The bill calls for gun owners to safely store guns in homes if a minor is present. Homes populated by adults only would not face the same requirements.

“After the tragedy they experienced, Connecticut is going to stay a leader on gun safety laws,” Lamont said of the Song family. “I’m proud that Connecticut passed that, and I’m ready to sign it. … They felt their loss like it happened yesterday, and they will for a long, long time. That’s not satisfaction, but at least give people the sense that we will do everything we can so that accidents like that cannot happen again.”

Lawmakers also banned so-called “ghost guns,” which can be assembled after purchasing the parts over the Internet. The last gun bill would ban the storage of unlocked guns in unattended motor vehicles in order to reduce gun violence. All pistols and revolvers would need to be placed in a locked glove box, a locked trunk or a safe inside the car.