One Step Closer to Some Tax Relief
The Finance, Revenue and Bonding Committee met on Monday (April 3) to hear testimony on revenue items to implement the governor’s budget. Office of Policy and Management (OPM) Secretary Jeffrey Beckham told the committee that the “major elements of the Governor’s plan are to provide low- and middle-class income tax relief as well as balance the fiscal year 2024-2025 biennial budget.”
Highlighting that the state has seen four — going on five — straight years of a budget surplus, a budget reserve fund at 15 percent of the General Fund – the statutory limit — and an additional $5.8 billion payment to the state’s unfunded pension liabilities, Mr. Beckham said the “Governor believes it is time for broad-based tax relief for Connecticut residents.”
The proposal will decrease the two lowest marginal rates in the Personal Income Tax (PIT). The 5 percent rate will be reduced to 4.5 percent and the 3 percent rate will be lowered to 2 percent. More than one million of the 1.7 million tax filers will get some tax relief. Depending on adjusted gross income, joint filers may receive almost $600 in tax relief and single filers could receive almost $300 in tax relief.
The Earned Income Tax Credit (EITC) will also increase from 30.5 percent to 40 percent of the federal tax credit starting in income year 2023. The increase will make Connecticut the fifth highest in the nation.
The bill will additionally return the tax credit rate for the Pass-through Entity Tax (PET) back to its pre-2019 level. PET was created to help business owners circumvent the $10,000 cap on state and local tax (SALT) deductions in their federally taxable income. The cap was created in 2017 in the Tax Cuts and Jobs Act, while the rate was lowered to address budget shortfalls in the 2019 legislative session. If passed, the credit will increase from 87.5 percent to 93.01 percent.
House Minority Leader Vincent Candelora (R-86), expressing his support of the bill, told the committee that he is in favor of the broad-based tax relief and points out that “money is continuing to be put into our pensions” and has not been going back to taxpayers. He said it was “laudable” that the state was able to put over $8 billion into the pension fund but wants to make “sure that we proportionately devote some of our surplus” to taxpayers.
Mr. Candelora would eventually like to see the state mimic a Massachusetts policy that dedicates a portion of their state’s surplus “to go toward tax relief.”
We are still waiting to see if the bill dies in committee or if it will pass favorably and be sent to the Senate for a vote. The committee has until April 20 to decide.
Housing Authority Won’t Be Given Ultimate Authority
A proposal that would “allow a housing authority to expand its jurisdiction to include other municipalities,” and gives housing authorities the “right” to acquire “real property that is not located in an expanded area of operation which it deems necessary for its purpose,” has been scaled down by the Planning and Development Committee.
The new bill — which was passed by the committee on Monday (April 3) but has yet to be posted online — still allows housing authorities to enter other municipalities but now all parties must agree.
While some lawmakers appreciated the revised language, there are still concerns. Sen. Ryan Fazio (R-36) thinks “other limitations could be put in place to make the bill better, including limiting the reach to different housing authorities geographically.”
Sen. Tony Hwang (R-28) wanted to know why they are creating a statutory requirement that “says you can opt-in and opt-out?” He voiced concerns that in the past “once one issue gets set into statute with an opt-in and opt-out, we can then initiate either a carrot or stick initiative by state funding to motivate to the next step”
This carrot stick approach can be seen in another piece of legislation introduced this year. Desegregate CT’s Work, Live Ride bill will force towns to create transit-oriented developments (TOD) or risk losing state-funded grants.
The Work, Live Ride and housing authority bills both passed out of the committee and are awaiting a scheduled date for a house vote.
Every Friday is a Good Friday for SEBAC
The House met on Wednesday (April 5) to vote on numerous resolutions.
As the state continues to struggle to make whole on a promise to give hero pay to those in the private sector who worked during the pandemic, the House voted in favor — 129 to 15 — of a resolution giving bonuses to state employees and members of the National Guard who also worked through the pandemic.
Unlike private sector workers who would receive a max payout of $1,000 — only if they made under $50,000 — members of the State Employees Bargaining Agent Coalition (SEBAC) will see checks of up to $6,000 depending on the type of work they did and the time they spent working in-person.
SEBAC members are also scheduled to receive a raise this July 1 as per the agreement reached between the union and state in 2022.
In addition to raises the agreement also included a $3,500 bonus along with retroactive pay. In a press release Gov. Ned Lamont thanked SEBAC for working out a “fair” deal. He noted that “state employees did extraordinary work during a paradigm-altering pandemic” however, “pandemic pay was not part of these negotiations.”
The resolution will next be voted on by the Senate as early as next week.
See Something Say Something
The House also approved to return Michael Pohl to the state Board of Pardons and Parole (BOPP). The vote tally was 85 – 61, with 11 Democrats joining all House Republicans in voting against Mr. Pohl.
Lawmakers debated for roughly two hours on whether Mr. Pohl should be returned to the board after his participation in the commutation of 71 criminals.
The commuted sentences were done through a policy change adopted by the BOPP in 2021 — without legislative approval — that resulted in a dramatic increase in the number of commuted sentences for individuals incarcerated on felony charges, including 44 individuals who were convicted of murder.
Prior to the policy change the highest number of commutations in a year had only been three.
Pohl was not directly engaged in the policy change but was involved in the release of the felons.
Representative Larry Butler (D-72) — who voted against the nomination — originally planned to let his vote speak for itself but opted to speak for almost 15 minutes questioning the judgment of the BOPP and asking members of the House to stand up for victims’ rights.
He ended his remarks by stating “We need to stand up for law-abiding people and those who become victims, we have to do right by them. The law that’s on the books in sentencing needs to be adhered to and not circumvented.”