Finance Committee Explores Abundance of Revenue Ideas As Deadline Nears
HARTFORD, CT — The Finance, Revenue, and Bonding Committee is expected to wrap up its work next week, but until then it seems to be pursuing every revenue generating idea it can to close the two year $3.6 billion budget deficit.
A committee bill published Wednesday proposes increasing the income tax rate on Connecticut’s wealthiest residents from 6.99 percent to 7.49 percent. It maintains the number of personal income tax brackets at six.
The proposal is part of a larger one that creates a 10 percent occupancy tax rate on bed and breakfasts and dedicates a portion of the taxes on hotels and lodging to promote and develop culture and tourism. It would also give motorists the option of paying an additional $5 when they register their vehicle to help pay for state park maintenance. Those who paid the fee would not have to pay for parking at state parks.
There is no fiscal note attached yet to the bill so it’s still unclear how much revenue the various proposals would generate.
The goal, according to Rep. Jason Rojas, D-East Hartford, was to get all the legislation out Wednesday so they can hold a public hearing on the proposals next Tuesday, April 25. The committee had held six public hearings since January.
The committee’s deadline to forward legislation to either chamber is April 28.
For most of the legislative session, leadership on the committee has been discussing broadening the sales tax base and increasing the 6.35 percent rate.
Gian-Carl Casa, president and CEO of the CT Community Nonprofit Alliance, emailed a statement to the news media Wednesday expressing his concern about rumors the committee is considering eliminating the sales tax exemption for nonprofits.
“Nonprofits have been exempted from sales tax here and across the country for good reason: they provide services in their communities so that government doesn’t have to,” Casa said Wednesday. “Eliminating that exemption would take funds from programs for individuals with developmental disabilities, people struggling with substance abuse, victims of domestic violence, and arts and cultural programs, to name just a few.”
According to the 2016 list of Connecticut’s tax exemptions, eliminating the exemption would cost the nonprofit community about $216 million in 2017.
It’s still unclear whether the committee would seriously entertain such a proposal.
Earlier Wednesday, House Speaker Joe Aresimowicz, D-Berlin, refused to take anything off the table with regard to the state budget. At the same time he admitted he doesn’t have the votes to pass what Democratic Gov. Dannel P. Malloy proposed in February.
Malloy’s $41.51 billion, two-year budget, gives 31 towns in the state more state aid than they currently receive. That means 138 cities and towns don’t benefit under the governor’s budget.
Add to that Malloy’s proposal to shift about one-third of teacher pension costs to municipalities and there are very few lawmakers left to support the governor’s budget proposal.
“Essentially, we’d be raising taxes by forcing them to raise property taxes,” Aresimowicz said.
He said he thinks it would be a mistake for cities and towns not to assume they will have to start picking up part of the cost of teacher pensions, even though it’s unlikely to be the $400 million put forward by the governor.
Aresimowicz said he needs 76 votes to pass a budget in the House. The way in which Malloy would distribute municipal aid gets him 42 budget votes.
“We’re short,” Aresimowicz said. “So we have to come up with a plan that represents Connecticut as a whole.”
Aresimowicz said any budget the Democratic majority puts forward will assume the $700 million in labor savings Malloy included in his February budget proposal.
The legislature’s two-budget writing committees are expected to release their budgets next week.
Meanwhile, this year’s deficit may be increasing.
Department of Revenue Services Commissioner Kevin Sullivan said Wednesday that he expects revenue collections to be below where they were last year.
That means the state will end fiscal year 2017 in deficit because the budget anticipates it will receive more revenue than it did in 2016.
Budget analysts are expected to weigh in on the state’s revenue estimates on April 28.