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Mixed Bag for Gov. Malloy's Budget Proposal

Sage Ross
Creative Commons
Gov. Dannel Malloy will present his proposed state budget for the next two fiscal years this Wednesday.

In preparation for his two year state budget proposal, Governor Dannel Malloy has warned Connecticut residents the budget is "tough."

During an interview with WFSB-TV's "Face the State" broadcast on Sunday, Malloy said he will be proposing to reduce the state sales tax from 6.35 percent to 6.2 percent on November 1, then dropping it to 5.95 percent by 2017.

These changes, The Hartford Courant reported, would ultimately save Connecticut consumers $70 million during the next fiscal year and $155 million in 2016-17. If the legislature approves the proposed budget, this would be Connecticut's lowest sales tax since 1971. The sales tax is the state's second-largest revenue generator, collecting $4.22 billion in the current fiscal year. The only tax that generates more revenue is the income tax, at more than $9 billion a year, according to The Courant.

Malloy has been forced to issue mid-year cuts to trim the deficit in the current fiscal year that ends June 30. In response, special interest groups, including nonprofit social service agencies, have told the governor and state lawmakers they cannot afford additional budget cuts. 

Malloy hopes that that the proposed state budget will provide economic relief to the middle class. While on a tour of small businesses in Middletown, The Connecticut Mirror reported that Malloy has focused on tax relief and that his proposal “has to be middle-class-centric.” The governor also said he would do away with some exemptions to lower sales taxes across the board.

Despite Malloy's proposed cuts the next two fiscal years are predicted to be $1 billion in the red. Next year’s projected deficit of $1.3 billion -- the same as it was when Malloy took his no-tax-hike pledge -- has prompted some to speculate about what business tax changes the governor is seeking. Connecticut Business and Industry Association President Joseph F. Brennan told The Connecticut Mirror, “One of the things holding us back is the overall cost of doing business in Connecticut.”

Malloy is scheduled to present his proposed state budget this Wednesday to a joint session of the General Assembly. It is the same day his administration is also expected to unveil details of the governor's proposed overhaul of Connecticut's transportation system.

Mallory ODonoghue is an intern at WNPR. This report includes information from The Associated Press.

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