Malloy’s tax rebate clears big hurdle

April 1, 2014

By: Keith M. Phaneuf | CT Mirror

Gov. Dannel P. Malloy cleared a big hurdle Tuesday in his bid to provide a $55-per-person rebate to taxpayers when the legislature’s tax-writing panel endorsed the plan.

The Finance, Revenue and Bonding Committee was expected to approve more than $210 million in tax cuts across this fiscal year and next before adjourning Tuesday. The panel also was expected to endorse tax relief for retired teachers, municipalities and business investors.

The committee’s recommendations, coupled with the $19 billion spending plan recommended last week by the Appropriations Committee, will form the foundation for negotiations with the Malloy administration as it and the legislature craft a final state budget for the fiscal year beginning July 1. The deal is expected to be completed before the regular 2014 legislative session ends May 7.

“The taxpayers of this state stepped up,” Sen. John Fonfara, D-Hartford, co-chairman of the finance panel, said, referring to more than $1.5 billion in state tax increases levied three years ago in response to a historic budget deficit.

With analysts now forecasting a $500 million surplus for the fiscal year about to end, it’s appropriate to return something to taxpayers, added Rep. Patricia Widitz, D-Guilford.

But minority Republicans on the Democratic-controlled panel tried to block the rebate, which is expected to return $155 million to low- and middle-income taxpayers, noting that the current surplus has very shaky underpinnings.

Malloy and Democratic legislators used borrowing and other gimmicks to push hundreds of millions of dollars of current expenses off until after the next election.

Nonpartisan legislative analysts say a $1 billion shortfall is built into the first state budget after the election.

“The state of Connecticut’s fiscal affairs is not right,” said Sen. L. Scott Frantz of Greenwich, ranking GOP senator on the finance committee.

Sen. Toni Boucher, R-Wilton, said residents in her district are more worried about a big tax hike coming one year from now than they are about receiving $55 this fall.

“They don’t take this serious at all,” she said. “They see this as an election-year giveaway.”

Malloy has said he expects the future deficit forecast will evaporate in the near future as Connecticut’s economy continues to improve, thereby bolstering tax receipts.

But while most of Malloy’s fellow Democrats backed him Tuesday, one argued against the rebate.

“I think we need to be aware that this surplus is the product of many things, and one of those things is borrowing,” said Rep. Edward Moukawsher, D-Groton, who recommended that all of this year’s surplus be saved to help offset the post-election deficit.

“I don’t feel we should do anything with this money but put it aside,” Moukawsher added. “When I go home I need to answer to my constituents.”