HARTFORD, Conn. (WTNH) — Connecticut Gov. Ned Lamont delivered his two-year, $50.5 billion budget plan to a joint session of the Democratic-controlled General Assembly, which includes the state’s first income tax reduction in nearly 30 years and its largest ever.
The Democrat said “economic growth and inclusive opportunity” is his main focus for the next two years.
“For the first time in over a generation, Connecticut has enjoyed strong economic and population growth,” he said Wednesday. “And more taxpayers, a growing economy, coupled with our shared fiscal discipline, has resulted in four consecutive balanced budgets, soon to be five.”
Republicans, who welcomed Lamont’s willingness to cut taxes, say it’s time to start giving back to taxpayers, especially considering the current fiscal year is expected to end with a $1.3 billion surplus.
“I think there’s still a real affordability issue in Connecticut,” House Minority Leader Vincent Candelora said. “So while the government has been working well for itself, the residents don’t feel that way.”
Reducing income tax rates for the middle class and working families
The governor’s budget plan includes the state’s first income tax rate reduction since 1996, which the Lamont administration says would benefit about 1.1 million of the state’s 1.7 million tax filers.
The state’s income tax has seven tax brackets, with rates ranging from 3% to 6.99%. The rates are marginal, affecting income up to a certain amount. Currently, a single filer pays a 3% tax on their first $10,000 of adjusted gross income and a 5% tax on income up to $50,000.
Under the proposed plan, the 3% percent rate would be permanently lowered to 2% beginning in January 2024, while the 5% rate would drop to 4.5%.
For married couples filing jointly, the new 2% rate would apply to their first $20,000 of adjusted gross income, and the 4.5% rate would apply to income up to $100,000.
Lamont estimated some joint filers could save almost $600 and some single filers could save nearly $300, depending on their adjusted gross income.
Increasing Connecticut’s Earned Income Tax Credit (EITC) for low-income families
The governor wants to increase the EITC from 30.5% of the federal credit to 40%. Doing so, Lamont said, would provide an additional $44.6 million in state tax credits to approximately 211,675 qualifying low-income households above the amount currently received.
Under the current rate of 30.5%, a married family with two qualifying children receives a state tax credit of up to $1,880. If the rate were 40%, that same family would receive a state tax credit of up to $2,465 — an additional $585.
Restoring the pass-through entity tax credit to help small businesses
Lamont plans to fully restore the “pass-through entity tax credit” that would allow more than 120,000 business owners to avoid the federal government’s $10,000 cap on state and local tax deductions.
Gun Safety Laws
The Lamont administration proposed laws to eliminate community gun violence and prevent mass shootings, suicides, domestic violence, and accidental shootings.
The governor wants to add more firearms to the state’s assault weapons ban and raise the age for buying long guns from 18 to 21, which is the age requirement for buying handguns.
He also wants to make it a felony on a first offense to illegally possess large-capacity magazines instead of a misdemeanor with a $90 fine.
Republican lawmakers and gun rights groups criticized the proposals, saying they affect law-abiding gun owners while not stopping criminals who skirt the law.
Lamont proposes increasing the Education Cost Sharing (ECS) grant program by $135 million. Some want education dollars released faster based on a formula passed in 2017, which gives more funding to poor districts and levels the playing field no matter what public school you attend.
Lamont is proposing $10 million in grants to help address teacher shortages and $7 million for a program to help kids who aren’t showing up for school.
Advocates are also pushing to fund higher education at a higher level.
“We’re going to have to do more for our higher education system than what’s done here,” said Speaker of the House Matt Ritter (D-Hartford). “I think we are going to have to go bigger on ECS. Those are the two big things. I think the governor knows that. As he said to me last night, I know we will be talking about that a lot.”
Lamont plans to use $20 million of COVID-19 relief money from the federal government to partner with non-profits that buy medical debt and get rid of it at a fraction of the cost.
The budget proposal includes an additional $200 million for workforce housing. The Lamont administration projects that 6,400 new housing units will be built in Connecticut over the two years.
Lawmakers will return to the Capitol Thursday to vote on a package that will include extending the budget controls passed in 2017 that have helped generate billions in surplus dollars.
There will be many other items in the package, including extending free school lunches through June and a fix to the bottle bill, so you don’t pay extra for those spirit seltzers.
The General Assembly will work to develop the official budget, which is due in a few months.
This story will be updated. Check back for updates.