Connecticut Governor Ned Lamont will present his next two-year state budget proposal to lawmakers on Wednesday. It includes tax cuts for more than a million state residents — the largest since the state’s graduated income tax rate was introduced in 1996.
Officials project the state will end its fiscal year on June 30 with a $1.3 billion budget surplus.
Lamont wants to spend about $440 million of that money on tax cuts. He is proposing targeting the cuts to low-income earners by increasing the eligibility threshold for the state’s earned income tax credit and reducing the lowest tax rate from 3 to 2%.
“So put those two pieces together, families earning up to $50,000 no income tax obligations in the state of Connecticut. People earning less than $40,000 will see a rebate thanks to the earned income tax credit,” said Lamont, as he touted his proposal in East Hartford on Monday.
His proposal also reduces the state’s 5% income tax rate to 4.5%. “That means most of the tax cuts, overwhelmingly, are going to go to people earning less than $100,000" Lamont added. "And almost all of it goes to families earning less than $150,000 to $160,000.”
He would also make it easy to get the tax cuts.
“Rather than rebates and credits, this is something that you are going to see in your paychecks starting January 1, 2024, in less than a year. You know most of you will see a reduction in your paycheck somewhere in the order of $30 to $40 a month,” Lamont said.
Connecticut can afford the tax cuts because the state is flush with cash. That’s thanks to a 2017 bipartisan legislative agreement that predates Lamont’s governorship. The deal regulated state spending.
Lt. Governor Susan Bysiewicz said it helped reverse Connecticut’s perennial state budget deficits, ushering in an era of budget surpluses and a substantial reserve.
“And after four consecutive years we have surpluses totaling over $2 billion each year, so we’ve been able to fully recapitalize that budget reserve fund," Bysiewicz said. "And that’s why I’m going to repeat this because this is a big deal, we want to reduce the five percent rate and the three percent to two percent for 2024. Saving taxpayers over $440 million.”
About 63% of the state’s 1.7 million taxpayers would benefit from Lamont’s proposal.
Republicans commend the governor but say he should do more.
“We want a one percent reduction in taxes for the middle class. So that’s something we are going to continue to push,” said state Rep. Vicent Candelora, the House Republican minority leader.
Members of his caucus in the General Assembly also want cuts for taxpayers in every tax bracket.
