State Senator L. Scott Frantz Casts Vote in Opposition to State Budget

Calls Budget a “Missed Opportunity” to Encourage Economic Growth

Hartford, CT – State Senator L. Scott Frantz (R-36) today cast his vote in opposition to HB 6802: An Act Concerning Expenditures and Revenue for the Biennium Ending June 30, 2011. After months of negotiations the most recent version of the state budget bill passed the House and Senate in the early morning hours of Tuesday September 1st.

“In the midst of the worst economic crisis we have seen since the Great Depression, the budget that passed in both chambers actually increases the dollars we will spend in 2010-2011 over the 2009 levels,” said Senator Frantz. “This is at a time when we should be working to reinvigorate business and reduce government spending in an intelligent and measured fashion while continuing to care for those in need. Unfortunately, the legislature failed. This is a missed opportunity, plain and simple.”

Incorporated into the budget are more than $1 billion in new taxes. Senator Frantz pointed to changes that he finds most disturbing: the income tax, the corporate tax and the estate tax. With respect to the income tax, single filers and married people filing separately who earn $500,000 per year, heads of household earning $800,000 or more and joint filers with incomes over $1 million per year will all see their tax rates rise to 6.5% from 5%.

“This is quite simply the wrong time to be raising taxes of any kind,” Frantz said. “Some of the hardest working people in Connecticut are being asked to pay more at a time when our state can least afford to lose its tax base. Connecticut cannot afford any further narrowing of the population that pays a significant amount of the tax obligation to the state. ”

Regarding the estate tax, Senator Frantz said even though the new law will raise the threshold to $3.5 million and eliminate the cliff provision, the estate tax should have been eliminated altogether. “This type of tax that produces a net loss of tax revenues has no place in a state that so desperately needs to preserve its tax base,” said Senator Frantz.

The bill also imposes a 10% corporation tax surcharge for income years beginning 2009, 2010 and 2011 on companies earning more than $100 million in annual gross revenues for any of these years.

“By imposing this surcharge on our state’s largest and most profitable employers at the worst possible time of the economic cycle, we are essentially telling them that we are generally not friendly towards business,” Frantz said. “This is a time when we should be working to stimulate job creation and retention. This additional tax burden, I fear, will force many companies, who have not done so already, to begin to look to other states for their business, taking jobs and tax revenue with them.”

In addition to the myriad tax increases, the budget also makes various tax credits less accessible to companies.

“The film tax credit has been one of the most successful economic development programs in recent years and has created significant numbers of new jobs,” said Frantz. “Now, a policy that had been working smoothly to spur economic growth has unfortunately been made so cumbersome and less effective when we need incentives the most.”

Reflecting on this budget process and what will be the new economic reality for the state as a result of this budget Senator Frantz said: “With these significant tax increases and without the intelligent, necessary reductions in spending, a ‘No’ vote on this budget was the only option for me. I am disappointed that the state legislature has failed to seize this opportunity to nurture a robust economy built on a foundation of smart, disciplined state spending and responsible tax policy. Yet I remain optimistic that there is a better way to put Connecticut on a path to prosperity once again and I will continue to fight to keep our state’s economy a priority.”