HARTFORD – State Representatives Bill Simanski (R-62), Tami Zawistowski (R-61) and Carol Hall (R-59) after hours of debate rejected the Democrat budget that raises hundreds of millions in sales taxes, raids the transportation fund to pay for ongoing services and hikes income taxes on thousands of small business owners.
Rep. Hall commented, “Overall this budget includes dozens of new taxes, charges and fee increases. This spending plan hits middle and working class families hardest. Connecticut residents will feel pain everywhere from the grocery store, dry cleaning and laundry to things such as Netflix. As a border community these tax changes make us even less competitive, new taxes on alcohol and prepared foods mean that even more people will do their shopping in Massachusetts.”
Parking garages, the Internet, dry cleaners, restaurants, plastic bags and scores of other goods and services will all cost Connecticut consumers more beginning July 1 due to sales tax hikes. Thousands of business owners operating as LLCs will pay an estimated $50 million more in income taxes under the Pass Through Entity tax because of the scheme hatched by the majority in order to close an estimated $3 billion deficit over the next two years that is of their making.
“At a time when our state is struggling to create jobs and grow our economy, this budget hurts our small businesses with a fifty million dollar tax on pass-through entities and increasing filing fees,” shared Rep. Zawistowski. “Additionally, this budget proposal reverses the progress made in the compromise budget by diverting revenue from the Special Transportation Fund. Connecticut residents overwhelmingly supported the lockbox amendment to our constitution, preventing funds from going into the lockbox is simply unacceptable.”
The budget was passed 86 to 65 with five Democrats joining all Republicans in opposition. Overall, taxes were raised by $752 million over two years, not including the tax on hospitals.
“I am extremely disappointed with this budget. It increases spending, it increases borrowing and it increases taxes. This budget repeats many of the worst habits of previous budgets including millions of dollars allocated for earmarks and grants for particular legislators,” said Rep. Simanski. “Over the course of the debate, we offered a number of amendments to protect small business, protect the special transportation fund and prevent fee increases. Unfortunately, the majority party refused to consider our alternatives.”
Instead, Republicans offered a series of amendments to reduce government spending, shrink the bloated bureaucracy, privatize certain state agencies, and preserve funding for the Special Transportation Fund (STF). and keep intact pension exemptions for seniors, as well as send more money for towns and cities. Municipalities would get an additional five percent in funding in the second year of the budget.
The Republican amendments relied on spending cuts to the taxpayer-funded Citizen Election Program which lawmakers rely on to fund their campaigns, furlough days for non-union state employees, privatization of certain agencies that provide social services, reductions in benefits for state retirees and the elimination of the Earned Income Tax Credit for workers who generally don’t pay income taxes.
The Republican amendments included the following:
- Preserve the property tax credits businesses receive operating as LLCs. The Democrats, just a year removed from implementing the credit, reduced it costing taxpayers $50 million in income taxes
- Block the re-financing of the teachers’ pension fund that will cost the next generation of taxpayers $27 billion more because the payments will be stretched out for an additional 14 years
- Block the diversion of $171 million over the next two years in new car sales revenue from the STF to the general fund
Republicans also proposed increasing aid to towns and cities and an omnibus pro-business plan that would be paid for through spending cuts and savings in government programs.
The pro-business amendment had several provisions:
- Repeal the business entity tax
- Phase out the capital stock tax
- The alternative Paid Family Medical Leave Act (FMLA) plan that would be optional and not a mandatory payroll tax