Gov. Malloy's 2019 budget includes no sales or income tax hikes - WFSB 3 Connecticut

Gov. Malloy's 2019 budget includes no sales or income tax hikes

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The governor unveils the fiscal year 2019 budget plan on Monday afternoon. (WFSB) The governor unveils the fiscal year 2019 budget plan on Monday afternoon. (WFSB)

The governor announced his fiscal year 2019 budget that included raising the gas tax, plans for tolls as well as increasing bus and rail fares. 

The first day of the legislative session is Wednesday, but Gov. Dannel Malloy released his plan two days earlier. 

During the announcement on Monday afternoon, Malloy said his budget builds on "the framework of the bipartisan, biennial budget adopted last year." 

"Our main objective in this proposal is to give legislators workable solutions that will bring the budget into balance and keep it there," Malloy said. 

Malloy said his budget includes no sales or income tax hikes. It also includes "a new, detailed plan for shoring up Connecticut’s Special Transportation Fund and bringing previously planned projects back online."  

 "If we fail to act fares will increase substantially for commuters and our roads and bridges will fall further into disrepair," Malloy said. 

According to the governor's office, his budget  includes the following proposals: 

  • Includes expenditure and revenue changes totaling more than $266.3 million.  These changes are responsive to the underlying $165 million shortfall identified by the latest consensus revenue forecast, and an additional $100 million of changes to correct unrealistic spending assumptions in the adopted budget or for unrecognized needs.
  • Reduces projected out-year deficits by half; decreasing by $1.35 billion in FY20, $1.43 billion in FY21, and $1.49 billion in FY22.
  • Takes steps to ensure the long-term solvency of the Special Transportation Fund and restoration of billions of dollars in transportation projects currently deferred.
  • Pays the entire State Employees Retirement System (SERS) and Teachers Retirement System (TRS) state contribution and proposes changes to smooth the looming TRS payment spikes.
  • Major tax rates are unchanged, but revenue changes include repeals of exemptions and credits or cessation of enacted rate changes.
  • Establishes a series of new steps to allow Connecticut’s citizens to receive more friendly tax treatment following the federal tax changes, including changes to pass-through entities, decoupling expensing and bonus depreciation, and allowing municipalities to create charitable organizations supporting local interests.
  • Annualizes FY18 budgeted lapses but preserves funding for Alliance Districts and towns most in need by reducing grants in wealthier communities.
  • Fully funds Juan F. compliance costs.
  • Increases funding to address the emergency placements within the Department of Developmental Services system, thereby alleviating pressure on the waitlist.
  • Adds additional temporary supports for those displaced by Hurricane Maria.
  • Reduces the assessment on the insurance industry by 3.7 percent.

Malloy said his budget is "about the future – specifically Connecticut’s long-term fiscal stability." 

“This plan continues to pay down the state’s long-term obligations, further reduces our reliance on one-time revenues, and identifies clearer and more achievable savings targets in the underlying budget," Malloy said in a statement on When it comes to our budget, there are few easy answers left for state leaders – what matters most is that we achieve balance with realistic and responsible changes.”

Speaker of the House Joe Aresimowicz (D-Berlin/Southington) said it was "helpful" to know the "governor’s budget ideas early."

"The reality is that starting Wednesday the legislature takes over, and we all know some of those ideas will likely survive and many won’t. I try to be careful not to dismiss any proposals out of hand, as the budget challenges ahead require that all options be considered by all parties as we move forward to build consensus over the next three months," Aresimowicz said in a statement on Monday.         

Senate Republican President Pro Tempore Len Fasano said the governor is "doing everything he can to make sure his failed policies outlive his time in office."  

"After seven years of disappointment, the governor still hasn’t learned from his mistakes. His brand of irresponsible tax policies, what he calls a progressive agenda, has created the crisis Connecticut now faces. What the governor released today is nothing more than a continuation of his legacy of tax increases, economic decline and penalties on the most vulnerable," Fasano said in a statement on Monday.       

Fasano commented on the changes made by the governor's budget proposal 

  • New tax on nonprescription drugs
  • New tax on low income working families and elderly individuals by eliminating the $200 property tax credit
  • Higher taxes on retirees by eliminating newly passed tax breaks on social security and pension income
  • Hurts the housing market by increasing real estate conveyance tax
  • Eliminates STEM tax credit
  • New tax on tires, gas tax increase and proposed implementation of tolls with no understanding of the cost to Connecticut residents
  • Increase to hotel tax
  • Penalizes job creators with tax increases, at the same time the national effort is focused on reducing burdens on job creators in other parts of the country
  • Does not restore funding for the Medicare Savings Program
  • Cuts to municipal aid
  • Rejects the new Education Cost Sharing formula that fairly distributed funding for the first time in decades to schools based on need, population, poverty and other factors.  

“Last year the legislature, in a bipartisan effort, did something historic, positive and full of hope. As we continue to work on our budget proposals, we intend to stay on that path. I think everyone in Connecticut knows by now that following Gov. Malloy’s leadership only brings fiscal disaster," Fasano said. 

Kevin Sullivan of the Department of Revenue Services commented on the new way for cities and towns to form charitable organizations for public purposes to offset tax liabilities.

"That one is consistent with federal lawfully consistent with the IRS code and fully insistent with current practice," Sullivan said. 

Joe DeLong from the Connecticut Conference of Municipalities said he's not surprised the governor is looking at different ways to help the state solve his financials problems.

"It's a starting point. The general assembly is obviously going to have their say and want to make adjustments and modifications," DeLong said. "But, I will tell you its a whole lot better starting point then where we were last year."

Malloy also puts a higher tax on cigarettes and a 25 cent per bottle fee on wine and liquor bottles.

"He's doing all those tax increases that he's governed for six years that's put Connecticut into a fiscal nightmare," Fasano said. 

One thing that still remains to be dealt with his the budget deficit at about $240 million. The governor's plan on Monday doesn't address that.

This Wednesday, the governor gives his State of the State and then he and the legislature will start figuring out a plan to get the state on a better path.

To read the full budget, click here. 

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