House GOP ups the ante in tax-cutting debate
House Republicans unveiled the Capitol’s most aggressive tax-cutting plan to date Wednesday, pitching a combination of ongoing and one-time relief worth more than $700 million and centered on middle-income households and small and mid-sized businesses.
Republicans also called for further investigations into the contracting practices of Gov. Ned Lamont’s administration and other initiatives to enhance government transparency.
“I think overall the affordability in the state of Connecticut is one of the biggest concerns that residents have,” said House Minority Leader Vincent J. Candelora, R-North Branford.
After two years of a coronavirus-induced economic slump, including a 2021 marked by inflation above 7%, Connecticut households and businesses are reeling.
State government, though, thanks to a robust stock market and unprecedented federal pandemic relief, has a record-setting $3.1 billion in its rainy day fund and is expecting an unprecedented $2.5 billion surplus when the current fiscal year ends on June 30.
The House Republicans’ chief plan to aid middle-income households would involve roughly $300 million in state income tax relief.
The GOP would boost the income tax credit that offsets local property tax expenses from $200 to $500 — a peak level it hasn’t reached since 2011. It also would again make households without children or seniors eligible for the credit — something they lost in 2018.
The $200 property tax credit currently provides about $53 million in annual relief to Connecticut families. The last time it stood at $500 and was available to households without children or seniors, it was worth $365 million.
House Republicans said working families also would benefit by repeal of the new mileage tax on commercial trucks proposed by Lamont and enacted last year by the Democrat-controlled legislature.
That tax, which would raise $90 million annually by 2024, would only exacerbate inflation, Republican lawmakers argued, driving up the cost of groceries, department store goods and other necessities typically transported by truck.
Rep. Holly Cheeseman of East Lyme, ranking House Republican on the tax-writing Finance Committee, said it was no accident that all of her caucus’ revenue proposals were aimed at broad groups of taxpayers.
“This is a question of priorities, and it’s clear where our priorities lie,” she said. “Where can tax relief give us the biggest bang for our buck?”
Lamont, a Greenwich Democrat, has said he fears tax hikes on Connecticut’s wealthy would drive them from the state. The governor did propose more than $330 million in tax cuts, including boosting the property tax credit to $300 and freezing municipal taxes on vehicles statewide at 29 mills.
But Candelora said that plan wasn’t aggressive enough, given state government’s swelling coffers. Democrats “represent the urban poor and our very wealthy. It’s the Republicans who represent the broad-based middle class,” the minority leader added.
Lamont’s office did not comment immediately after the House GOP issued its recommendations.
The caucus’ chief proposal to aid Connecticut businesses is tied to the massive debt the state’s unemployment trust incurred during the pandemic.
According to the Department of Labor, the state borrowed about $850 million from the federal government to keep jobless benefits flowing. Businesses legally are responsible for covering that debt and face a special assessment starting this fall.
The governor and legislature agreed last summer to use $155 million in federal pandemic relief grants to help close that debt. House Republicans would draw another $300 million from the state’s surplus to further reduce what businesses would owe.
The caucus also proposed bolstering another credit for small and mid-sized businesses that would provide an estimated $50 million in recurring, annual relief.
House GOP: Shadows in Lamont administration predate latest controversy
Besides pitching tax relief, House Republicans also focused much of their agenda for 2022 on increasing transparency in state government.
“One of the issues that we certainly continue to see percolate is the corruption that yet again has hit the state of Connecticut,” said Candelora, who said a culture of diminishing transparency struck the state not long after Gov. Ned Lamont took office in January 2019.
By April of that year, Lamont and hedge-fund billionaire Ray Dalio would announce a public-private partnership to invest at least $200 million across five years in Connecticut’s under-performing schools. But by June, the CT Mirror would disclose that as a condition of funding half that initiative, Dalio and Lamont would insist upon the partnership being exempt from state ethics and disclosure laws.
Dalio and his wife, Barbara, dissolved the partnership one year later following media reports that the Dalios were forcing the venture’s executive director from the job.
And while FBI officials currently are investigating certain projects overseen by Lamont’s former deputy budget director, Kosta Diamantis, Candelora noted the seeds of that problem were planted in the spring of 2019. That’s when the Lamont administration unilaterally moved the state’s massive school construction program from the Department of Administrative Services [DAS] into the governor’s budget office in the spring of 2019 — an act that Candelora and many other legislators, from both parties, argued couldn’t be done without legislative approval.
“It was no surprise to us that within a couple of years of that happening we’re seeing scandals arising out of that,” Candelora said, adding that it’s time for an independent review of contracting practices.
“If we have individuals that are involved in scandals and corruption ... I don’t think it behooves us to join arms and have the very people involved in these scandals actually do the investigation,” Candelora said. “We actually need a more forensic accounting, that is not just going to look at how the money was spent but how much of that money was spent, and who benefited.”
House Republicans would require all quasi-public state agencies to abide by all transparency and ethics standards imposed on more traditional state agencies. That includes being subjected to oversight by the State Contracting Standards Board.
The governor, in his latest budget proposal last week, recommended removing the contracting board’s chief enforcement power — to suspend any procurement process deemed not in compliance with state rules.
Another House Republican proposal would make all contracts entered into by the state but not subjected to competitive bidding available for public review on the internet.