Democratic legislative leaders held a press conference pitching a $46 billion budget proposal from the Appropriations Committee and announcing their intention to push forward with tax increases on Connecticut’s wealthy residents despite opposition from Gov. Ned Lamont.
Democrats in the Finance, Revenue and Bonding Committee passed two taxes increases that would affect the state’s top earners, including a 2 percent capital gains surcharge and a “consumption tax” on the income of those earning $500,000 or more.
“We’re interested in pushing the principle of progressive taxation and progressive revenue structure to whatever extent we possibly can,” said Senate President Pro-Tem Martin Looney, D-New Haven.
“The capital gains [tax] is something we’ve pushed for three years,” said Speaker of the House Matthew Ritter, D-Hartford. “We believe that a 1 percent on capital gains would be a fair way to bring revenue in and it is really soft income that people don’t have to work for.”
Under the Finance Committee budget, the proposed tax increases would be diverted from the General Fund and placed in a new Equitable Investment Fund overseen by a nine-member board, including only two elected officials.
Although there has been significant pushback to that plan – including Republicans asking Attorney General William Tong to examine the constitutionality of the fund – Ritter and Looney both said the idea remains alive and they are hoping to establish some kind of fund aimed at investing in Connecticut’s cities and low-income residents.
Ritter and Looney both said that while the $1.6 billion budget deficit has been effectively bridged through the use of federal funds they need the tax increases so the state won’t face a fiscal cliff in year three when federal money disappears.
Ritter added that it is not all about revenue increases but redistributing that tax revenue through a state child tax credit and an expanded earned income tax credit.
“It’s not spending, it’s investing,” said Toni Walker, D-New Haven, and co-chair of the Appropriations Committee. “We have the revenues and we need to use those revenues to elevate our people in our state and cities and communities now.”
Appropriations Committee co-chair Sen. Cathy Osten, D-Sprague, said that Connecticut is “meeting our obligations” and paying down some of the state’s massive pension debt through the volatility cap.
Democratic leaders will move forward negotiating with Gov. Lamont on reaching a budget deal.
Although Lamont has maintained opposition to raising taxes when the state is enjoying budget surpluses, a maxed-out reserve fund and federal COVID-relief money, Looney said the basis for negotiation is their budget, not the governor’s.
“The basis for negotiation is this budget, not the one he put out in February,” Looney said.
The leaders said that they are not concerned with a Lamont veto, as they intend to negotiate with the administration. “Everybody has to have some give and take,” Ritter said.
The Appropriations Committee biennial spending budget aligned with the $45.9 billion proposed by Gov. Ned Lamont earlier in the year but the question of what to spend it on and the possibility of tax increases to fund the spending remain on the table.
Republicans have remained steadfastly opposed to any tax increases and earlier in the year moderate Democrats issued a press release stating their opposition to raising taxes.
With only three weeks left in the legislative session in which to work out a budget with the governor, Democratic leaders were optimistic on reaching a budget deal before June 9.