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State lawmakers looking to repeal CT’s ‘poverty tax’, calling it a ‘dream crusher’

Connecticut

HARTFORD, Conn. (WTNH) — Connecticut lawmakers are looking to get rid of what they call an “archaic state policy” used to penalize residents who are on temporary government assistance.

Lawmakers tried to repeal this so-called “Poverty Tax” last year, then COVID-19 shut down the legislature.

This year, they’re back at it fearing the pandemic may cause more folks to eventually go on welfare,
leaving them in this vicious cycle.

In the last 40 years, more than 30 states have repealed laws requiring welfare recipients to pay back the government. But not Connecticut.

Renee Blake of Stratford was in her 20’s when she signed up for temporary state assistance. She told News 8, “It may have been in the small print at that time. You’re young trying to get help, you don’t read that kind of stuff.”

“The state is hurting people and keeping them from prospering on their own,” added Isee Greenwood who lost her New Haven home because of the law.

Both of these single moms went on temporary state aid when they were in their 20’s. Decades later, they’re on their feet and bought homes. But an old law on the books is dragging them back into poverty.

Speaker of the House State Representative Matt Ritter (D) describes the liens as “ultimate dream crushers.”

Appropriations Chair New Haven Representative Toni Walker (D) says with this policy “you are never given an opportunity to succeed and are pulled back in.”

These Democratic lawmakers are proposing a bill to repeal the old law and wipe away some of the welfare debt.

A five-year lookback found 1,300 state welfare liens were put on homes. The average price $14,000. Meaning, if the bill passes the state loses $18.3-million.

A cost these lawmakers say is worth it when breaking the cycle of poverty.

“That’s more than they earn in a year and if it’s interest and compounded that’s ridiculous,” added Rep. Walker.

The House speaker says, “We are telling people ‘don’t aim higher, don’t try and build generational wealth. Stay in your place.’ It’s dumfounding and we’re going to change it.”

Expect a fight. Last year the Department of Administrative Services Commissioner and now Chief Operating Officer for the state Josh Geballe testified against the idea.

He told committee members, “Perhaps most importantly, this bill could jeopardize our state’s eligibility to receive federal reimbursement for medical services…Some programs, such as long-term care, require state collection efforts…In Connecticut, the federal reimbursement amount for all state-administered Medicaid programs exceeded $1-Billion for the fiscal year 2019.”

Greenwood tried to refinance her home, but the bank said because of a $100,000 state lien she was ineligible. Unable to afford her mortgage she lost the home in foreclosure. Her family was separated – each living with different relatives so they weren’t homeless.

And because of the policy, 61-year-old Renee Blake can’t afford to retire to Georgia: “I had no idea I had a lien. It’s for over $37,000 dollars going back 40 years.”

Eleven states, including Connecticut and the District of Columbia, make families pay back government aid “beyond” what is required of federal law.

Other states waive debt after 10 years, and some will not lien a property if it is owner-occupied.

A public hearing on the issue is expected in the coming weeks in the Appropriations Committee of the State Legislature.

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