The legislature's two budget committees - Appropriations and Finance - have just recently approved a legislative plan for the state budget. This budget plan would be significantly fairer in most ways than the one proposed by Gov. M. Jodi Rell earlier in the legislative session.
If the practice of the past few years is followed this year, the budget approved by the full legislature will be the budget agreed to, after negotiations, by the governor and legislature. So, the plan approved by the Appropriations and Finance committees is likely, for all intents and purposes, the Democratic alternative to Gov. Rell's proposed budget.
The legislature's fairer revenue plan.
The proposed budget would lower income taxes for more than 90% of the people in Connecticut. It would lower income tax rates for married couples with incomes between $44,000 and and $124,000. And, even more importantly, it would increase the Property Tax Credit from $500 to $1000. This would mean large property tax relief by letting people take up to $1000 off their income taxes to cover the property taxes they pay.
Meanwhile, the legislature's plan completely tosses out the governor's plan to increase income taxes on most people. Instead, it lowers taxes for most people, while asking the wealthiest people in the state to contribute a modest amount more.
Here are some of the details of the tax fairness plan:
Of course, there are some aspects of the plan that I do not like. One thing I do not like the fact that the plan would eliminate the exemption for clothing under $50. Eliminating dollar-based exemptions like this is a part of complying with the standards that will be expected for the state to participate in a multi-state compact to recover hundreds of millions of dollars in sales tax revenue lost when sales are made online instead of in local stores. Even though people who buy things online are supposed to pay the 6% state "use tax", most do not, putting local retailers - and local jobs - at an unfair disadvantage. But I am deeply uncomfortable with taxing basic necessities like lower-priced clothing. That is why the new state Earned Income Tax Credit is so important. It is designed to make up for the increased sales taxes.
But, overall, the plan is very good, delivering income tax cuts and property tax relief to most of the people in the state and making the state's tax system fairer.
The legislature's fairer appropriations plan.
In addition to the direct property tax relief that the legislature's budget plan would provide, it also increases state education and property tax relief grants to cities and towns by $30.9 million over the governor's proposal. For New Britain, for example, this will mean at $1.2 more than the governor proposed for funding needed to hold the mill rate down and support our local schools. And this is not even taking account of increases in special education and priority school district funding also included in the legislative budget plan. Here is a summary of much of the increases, statewide:
Also, while I am advocating for approval of a real and comprehensive universal health care plan, it is important to note the increased health care funding included in the legislative budget proposal is very extensive. One important aspect of this proposal is that provider rates would increased significantly, helping those who work to help people to be healthy to cover more of their costs in doing their important work.
There is a lot more work to do before the final approval of the state budget, but this plan would be a significant improvement from the past, and much fairer than the proposal submitted by the governor.
If the practice of the past few years is followed this year, the budget approved by the full legislature will be the budget agreed to, after negotiations, by the governor and legislature. So, the plan approved by the Appropriations and Finance committees is likely, for all intents and purposes, the Democratic alternative to Gov. Rell's proposed budget.
The legislature's fairer revenue plan.
The proposed budget would lower income taxes for more than 90% of the people in Connecticut. It would lower income tax rates for married couples with incomes between $44,000 and and $124,000. And, even more importantly, it would increase the Property Tax Credit from $500 to $1000. This would mean large property tax relief by letting people take up to $1000 off their income taxes to cover the property taxes they pay.
Meanwhile, the legislature's plan completely tosses out the governor's plan to increase income taxes on most people. Instead, it lowers taxes for most people, while asking the wealthiest people in the state to contribute a modest amount more.
Here are some of the details of the tax fairness plan:
*Income tax cut for Joint Filers up to $190,000The plan also would create a state Earned Income Tax Credit set to 20% of Connecticut taxpayers' federal Earned Income Tax Credit. This is important to refund poorer taxpayers for the money that they pay in sales and excise taxes. It puts millions of dollars into our state's economy, especially in cities like New Britain, and helps working families to make ends meet.
*A more progressive income tax:
For Tax Year 2007 – Joint Filers
0-$20,000 - 3%
$20,001 - $100,000 – 4.875%
$100,001-150,000 – 5%
$150,001 - $200,000 – 5.25%
$200,001 - $250,000 – 5.8%
Over $250,000 – 6.15%
For Tax 2008 and after - Joint Filers
0-$20,000 - 3%
$20,001 - $100,000 – 4.75%
$100,001-150,000 – 5%
$150,001 - $200,000 – 5.5%
$200,001 - $250,000 – 6.25%
Over $250,000 – 6.95%
Of course, there are some aspects of the plan that I do not like. One thing I do not like the fact that the plan would eliminate the exemption for clothing under $50. Eliminating dollar-based exemptions like this is a part of complying with the standards that will be expected for the state to participate in a multi-state compact to recover hundreds of millions of dollars in sales tax revenue lost when sales are made online instead of in local stores. Even though people who buy things online are supposed to pay the 6% state "use tax", most do not, putting local retailers - and local jobs - at an unfair disadvantage. But I am deeply uncomfortable with taxing basic necessities like lower-priced clothing. That is why the new state Earned Income Tax Credit is so important. It is designed to make up for the increased sales taxes.
But, overall, the plan is very good, delivering income tax cuts and property tax relief to most of the people in the state and making the state's tax system fairer.
The legislature's fairer appropriations plan.
In addition to the direct property tax relief that the legislature's budget plan would provide, it also increases state education and property tax relief grants to cities and towns by $30.9 million over the governor's proposal. For New Britain, for example, this will mean at $1.2 more than the governor proposed for funding needed to hold the mill rate down and support our local schools. And this is not even taking account of increases in special education and priority school district funding also included in the legislative budget plan. Here is a summary of much of the increases, statewide:
Total town aid is $2.286 billion, which is $235.876 million over FY 07In addition, while the governor's budget would provide no cost-of-living increases for non-profit agencies, like CCARC on Slater Road in New Britain, the legislature's budget provides increases for these important services. It also increases funding for hospitals. While the governor recommended complete elimination of the important state funding for the Opportunities Industrialization Center in New Britain, the legislature's budget restores funding for this program.
Total amount over the governor - $30.9 million
Amount over the governor for each grant
Payment-in-Lieu-of-Taxes (PILOT) State Owned - $15.3 million
PILOT Colleges & Hospitals - $15.2 million
Pequot/Mohegan Fund - $14.8 million
Town Air Road - $ 8 million
Adult Education - $1.6 million
Also, while I am advocating for approval of a real and comprehensive universal health care plan, it is important to note the increased health care funding included in the legislative budget proposal is very extensive. One important aspect of this proposal is that provider rates would increased significantly, helping those who work to help people to be healthy to cover more of their costs in doing their important work.
There is a lot more work to do before the final approval of the state budget, but this plan would be a significant improvement from the past, and much fairer than the proposal submitted by the governor.
