Day 111: State budget could eliminate car tax, no plan in place - WFSB 3 Connecticut

Day 111: State budget could eliminate car tax, no plan in place to fill gap

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(WFSB file) (WFSB file)
HARTFORD, CT (WFSB) -

Legislative leaders said an agreement has been reached, which could include the elimination of the car tax. 

Connecticut has been without a budget for 111 days and Thursday, the state remained without a deal in place. Democrats and Republicans held caucuses on Thursday.

Lawmakers have not released many details about the budget. Leaders on both sides said they had to first present it to their rank and file members, as well as the governor. 

"Do I think this is the perfect compromise, no," House Republican Leader Themis Klarides said. "But, I don't know what document is perfect in any way shape or form.

The tentative bipartisan agreement, which was agreed on by Republican and Democratic leaders on Thursday, may eliminate the car tax.  Klarides said the car tax cap would be a $39 million instead of $37 million. 

"And in the second year, the car tax would be eliminated," Klarides said. 

Speaker of the House Joe Aresimowicz explained the process behind possibly eliminating the car tax. 

“You are being taxed one way or another whether it’s on your motor vehicle or your property tax," Aresimowicz said. “We are in the finance committee looking at many options as it comes to taxation of motor vehicles. But, we believe that not taxing a motor vehicle is a good thing. In Connecticut, we all pay our mortgages, there is a certain allotment that goes off to our property tax. And then six months later, we get our bill for our car tax. If it was rolled into the mortgage or the property tax payment, it would be a better program for us all. It’s a nuisance tax.” 

Klarides said Connecticut residents would no longer pay a tax on their cars and municipalities could no longer impose them. However, there was no plan to fill the gap that would be left by the car tax elimination in the second year.

"Well, that's what cities and towns would have to make difficult decisions on," Klarides said. "The car tax would be eliminated totally." 

Aresimowicz added that there is a "hefty cost" to collecting the car tax. 

"It's really a nuisance for all the taxpayers," Aresimowicz said.

Aresimowicz added to him that  elimination of the car tax "was part of the deal." 

"Obviously, if people want to have further discussions, we can," Aresimowicz said.  

If eliminated, it would be a loss of hundreds of millions of dollars for cities and towns.. For Hartford alone, it would be a loss of $25 million.

"We have somewhat of an archaic bizarre system in Connecticut where you pay where you reimburse," Majority Leader Matt Ritter said. "We are going to simply and work with the towns."

Gov. Dannel Malloy spoke about the agreement around noon.

"I'm going to reserve judgment until I see a document," Malloy said. 

The Democrats are expected to meet with the governor on Saturday. Republicans are expected to meet again on Monday. The Republicans said they were not invited to the meeting with the governor. 

"Towns and cities are going to have to make serious decisions as we've made on the state level," Klarides said. "As you've heard me say before, cities and towns manage their budgets way better than the state ever could."  

On Thursday, leaders said they've agreed on major issues such as a spending cap and a bond agreement. They are still working out the details of a new education formula to pay schools. 

 "The negotiations truly were a victory for the state of Connecticut," Aresimowicz said.

Some things are off the table such as a hospital tax, cities, and towns contributing to teacher retirements and the Republican plan to change pension benefits for state workers in 10 years.  

"We are very confident to have the votes in our caucus to pass this budget by the bipartisan vote," Aresimowicz said.

"Who knows where those document ends up and I don't have a document to make a judgment on," Malloy said. "So don't know what the proposals are."

The bi-partisan deal cuts funding to public colleges but spares financial aid. As for the University of Connecticut, it may be sigh of relief, the cuts are slightly higher than those proposed by Democrats but significantly less than what Republicans wanted.

The deal could help the capital city avoid bankruptcy, but first, it would have to restructure its debt in order to get any state money.

"It's my understanding there is the framework in this agreement to allow the state to partner with the city in a sustained way,” Hartford Mayor Luke Bronin said. “That's got to be our goal.”

State Rep. Daniel Rovero was one of a few Democrats who voted for the GOP budget, which caused the Democratic budget to fail.

“I believe it was the right thing to do more than ever now because I think we came up with a budget, which is what I would have liked to have seen, a compromised budget,” Rovero said. “Both sides get together.”

If the governor vetoes this one like he did the Republican budget, lawmakers hope they have the votes to override it this time. Connecticut remains the only state without a spending plan.

Democratic and Republican leaders were expected to meet again on Monday. 

Stay with Channel 3 for continuing coverage of the state budget crisis.

Copyright 2017 WFSB (Meredith Corporation). All rights reserved.

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