Surging state tax collections have pushed Connecticut’s budget surplus to nearly $4 billion. That has prompted Republicans to call for $1.2 billion in new tax cuts. Democrats dismiss that. They say the extra money would help them reach a final budget deal with Governor Ned Lamont.
The state’s surplus is 44% higher than had been predicted just a month ago.
The huge windfall is because Connecticut residents are overtaxed, said Kevin Kelly, the state Senate Minority Leader. That’s why the GOP is calling for tax cuts including reducing the sales tax from 6.35% to 5.99%, and extending the gas tax holiday until the end of the year.
“That’s the right choice. Particularly when we know our budget is balanced in surplus and we have historic levels in our savings accounts,” Kelly said.
The GOP plan would violate restrictions placed on how much tax relief the state could give after receiving federal American Rescue Plan Act money, said Democratic House Speaker Matt Ritter.
“To pass tax cuts without some legal guidance and clarity seems like the height of irresponsibility," he said. "And you can do that when you don’t have to run the ship."
However, the surge in revenue would enable the state to afford $150 million for an annual child tax credit for moderate to low income families beginning in 2024 or 2025, Ritter said.
That has been one of the issues holding up a final budget deal with Governor Ned Lamont, he said.
