Connecticut residents will awake to the news of higher taxes Wednesday, as the Democratic-controlled House of Representatives voted to approve a $40.1 billion biennium spending plan just minutes before midnight Tuesday that raises taxes and fees on everything from income and sales to the cost of cremations and pet grooming.
The house voted 83 to 67, with one member absent, to approve the budget late Tuesday evening, the final stumbling block in the , but which has gone through several revisions since, including the elimination of a proposed three cents a gallon increase in the state’s gas tax and the restoration of $300 worth of a $500 property tax credit that Malloy’s initial budget excised.
The House's debate on the budget lasted almost 10 hours, and when it was over 15 Democrats had broken party ranks to join all 52 Republican members of the House in opposing the proposal, including Mary Fritz of Wallingford, Jason Rojas of East Hartford and Steve Mikutel of Griswold. Terry Backer, the assistant majority whip who represents the Stratford area, was absent and did not vote.
Members of the state Senate approved the budget early Tuesday morning in a similar marathon session that ended just after 3 a.m., with 19 in favor and 17 opposed. In the Senate, all 14 Republicans voted against the plan while three Democrats – Asst. Majority Leader Edward Meyer, D-Branford, Sen. Gayle Slossberg, D-Milford, and Sen. Joan V. Hartley, D-Waterbury – joined them in voting against the bill.
As he did after the Senate vote, Malloy praised the House members that supported the budget in a release sent out minutes after the vote, specifically Speaker Chris Donovan, Majority Leader Brendan Sharkey, Appropriations and Finance Co-Chairmen Toni Walker and Patricia Widlitz.
“With the passage of this budget by the Democrats in the House of Representatives, coming on the heels of yesterday’s passage by the Senate, Connecticut has taken another important step toward much-needed fiscal stability,” Malloy said in the release. “As I said yesterday, I know it’s a tough vote – it’s also the right vote. This budget is balanced, honest, and contains none of the gimmicks that helped get us into this mess. It will provide the stability we need to foster much-needed job creation – which is everyone’s top goal.”
The biennium budget, which includes total spending of $19.8 billion for the 2011-12 fiscal year, and $20.3 billion for the 2012-13 fiscal year, plugs a $3.5 billion estimated budget in the coming fiscal year through spending cuts and tax and revenue increases. The plan also asks for $2 billion in concessions from the state’s unionized employees, which have not been arrived at yet, would add $1 billion to the state’s “rainy day” fund over two years, and breaks with the recent tradition of using one-time revenue or borrowing to help balance the state budget.
Starting July 1, the beginning of the new fiscal year, higher taxes and fees will kick in on numerous items and services under the budget.
The state sales tax will rise from its current 6 percent to 6.35 percent, with 0.10 of that tax being returned to the municipality in which it was spent. While “luxury goods” such as cars costing more than $50,000, boats costing more than $100,000, jewelry over $5,000, and items of clothing over $1,000 will be taxed at 7 percent.
Income tax rates rise almost across the board under the new budget, but more sharply for the state’s highest earners. Married couples earning over $500,000 and single filers earning more than $250,000 will pay 6.7 percent in income tax in the coming fiscal year.
The budget also closes tax exemptions on a number of items, such as yoga studios, clothing and footwear under $50, non-commercial cloth, fabrics and yarn, and non-prescription drugs and medicine. It will also cost you more to attend concerts and sporting events at a number of Connecticut arenas and stadiums, as a 10 percent “admission exemption” will also be lifted.
New taxes on items that have never been previously taxed before, such as pet grooming, manicures, pedicures, nail services, and auto towing and storage will also be levied.
Connecticut’s estate tax will also be lowered from its current threshold of estates valued at $3.5 million and more to estates valued at $2 million and over, which will be applied retroactively to January 1, 2011.
It will even cost you more to renew your license, register your car, pay a motor vehicle fine, or cremate a body under the new budget.
“It’s the largest tax increase in the history of the state of Connecticut, and the devastating affect it’s going to have on our citizens is something that I deeply regret,” Minority Leader Lawrence Cafero, R-Norwalk, said after the House passed the budget early Wednesday.
Cafero and other Republicans pushed for votes Tuesday on everything from the GOP’s own “no tax increase” budget proposal to amendments that would essentially whittle away must of the new tax and fee provisions called for under Malloy and the Democrat’s budget. The Republican proposals stood little chance of success, however, as Democrats control the House by a wide majority, although they did serve to significantly prolong the debate.
“It might be wishful thinking on my part, but when the details of this budget and the $1.8 billion worth of taxes on everything you can think of gets out to the public they will be so demanding that we change course that hopefully we can come back in the next five weeks and undo what we just did,” Cafero said. “…$1.8 billion in taxes at a time when we can least afford it, and the galling part of it is that we claim that we need to tax our citizenry even more, already being the highest taxed state, because we need to spend more money. We’re actually spending more money than we did the year before. In my opinion, with due respect, it’s unconscionable.”
But Donovan, a Meriden Democrat, hailed the spending plan as one that was “fair, balanced and needed.”
“We listened to the public,” Donovan said after the vote. “The governor called for shared sacrifice, and we wanted to make sure that it was fair shared sacrifice. We made sure the middle-income people weren’t hit particularly hard and we asked those who make a little more – kind of the wealthy – to kick in a little more.”
In its final act of the evening, the House opted to forward the budget to Malloy for his approval.
Malloy said it was now time for his administration to reach an agreement with the unions on the $2 billion in concessions called for in the budget, although in recent weeks the two sides have differed publicly in their statements as to how close – or how far apart – they actually are.
“Now it’s up to my Administration to reach an agreement with our fellow state employees and to present it to the legislature for ratification. I remain hopeful that we’ll get there. If we don’t, I remain committed to presenting an alternative budget to the General Assembly in the next couple of weeks,” Malloy said as part of the release he issued just minutes after the House’s approval. “Make no mistake: come July 1, Connecticut will have an honest, balanced budget in place. No smoke, no mirrors. A solid foundation for the future.”
Read the full analysis of the biennium budget here.