Sales Tax Scrapped As Part of Budget Negotiations
HARTFORD, CT — (Updated 2 p.m.) House Speaker Joe Aresimowicz said Monday that a broad-based sales tax increase was no longer under consideration as part of negotiations on a two-year state budget.
House Democrats had originally proposed a 6.85 percent sales tax increase. As part of his compromise proposal, Gov. Dannel P. Malloy on Friday put forward a plan to increase the sales tax to 6.5 percent. House and Senate Democratic leaders met with Malloy this weekend.
The governor’s proposal would raise $87 million in 2018 and $133 million in 2019.
At the moment there’s no proposal to fill the hole left by scrapping the sales tax increase.
“We’re looking at additional cuts and efficiencies to see if we can come up with a deal that works for everybody,” Aresimowicz said.
Under the current proposal the sales tax would remain at 6.35 percent. However, Democratic lawmakers and Malloy are still considering a 7 percent sales tax on food and beverages and an increase in the hospital tax.
Of a sales tax increase on restaurants, Aresimowicz said “it’s not going to have much of an influence.”
Moderate Democratic lawmakers in both the House and the Senate were opposed to a sales tax increase.
The distribution of municipal aid and education cost sharing grants are still under discussion.
As of noon Monday, Republican legislative leaders had still not turned over their budget proposal to Democratic lawmakers, but Aresimowicz insisted they will continue to be part of discussions if they come forward with a revised budget proposal. Republican legislative leaders said they were not invited to the negotiating table this weekend.
“It seems like there’s lines in the sand in certain areas,” Aresimowicz said. “Look, we’re going to include some of their ideas because it’s the right thing to do, not because we’re going to be relying on their votes to pass it.”
Republican legislative leaders said it’s unclear what Democratic lawmakers are doing because they haven’t seen their whole finance package. The meeting they had scheduled for 12:30 p.m. Monday with Democratic legislative leaders was canceled.
“We have no idea what they’re doing,” Senate Republican President Len Fasano, R-North Haven, said.
He said they weren’t invited to the Sunday night meeting with the governor where the sales tax increase was scrapped.
House Minority Leader Themis Klarides, R-Derby, said if they can’t agree to structural changes, like establishing a spending cap, then there’s no reason to even discuss the numbers.
“It is very clear they have no interest in changing the way the state of Connecticut works,” Klarides said. “They do not want to fix this problem.”
She said she has more confidence in the path of Hurricane Irma than “where the state’s going.”
Fasano said they would be releasing their revised budget proposal Tuesday.
He said there’s still been no public release of a budget from the Senate Democrats.
Senate President Martin Looney, D-New Haven, said when they release their budget Republicans are going to be surprised at how much “structural change” has been included.
“If you don’t want to deal with the structural changes, then whatever budget they put out is doomed for failure,” Fasano said. “And it’s doomed to set the state on the same path they have followed for six years.
Democratic legislative leaders like to point out that Republicans haven’t voted in favor of a budget since 2007. Republicans like to point out that since that time they’ve whittled away at the Democratic majority in the legislature, coming within a handful of seats in the House and drawing even in the Senate.
Fasano said Democrats are losing members in the House and the Senate every year they fail to adopt “structural changes.”
Republican legislative leaders sent Democratic legislative leaders a list of structural changes they want to see in the budget. The memo details why the Democratic version of those structural changes won’t work or doesn’t go far enough.
Democratic leaders also met Monday with the Connecticut Hospital Association, which is opposed to Malloy’s increase in the hospital tax.
Malloy’s latest budget revision also scrapped his plan to levy a real property tax on hospitals. Instead, he wants to increase provider reimbursement rates and increase the provider tax rate by 55 percent. By structuring the tax in this way, the state is able to leverage federal reimbursement, according to the governor. The Malloy administration says it promises to give the hospitals back the money.
But the Connecticut Hospital Association is opposed.
“We’ve been here before, and unfortunately are here again,” Jennifer Jackson, CEO of CHA, said Friday. “Gov. Malloy’s revised proposal would hike the hospital tax, increasing healthcare costs, threatening the quality of care on which we rely, and dramatically harming our ability to serve the community.”
Jackson said it’s simply another tax hike.
The hospitals don’t trust the Malloy administration to make good on their promise to return money to the hospitals.