Governor Ned Lamont on Wednesday introduced several tax policy proposals that he says will save taxpayers more than $300 million.
Lamont’s proposed tax cuts, estimated at $336 million, come in the form of a property tax credit, a student loan tax credit, pensions and annuities, and a lowering of the thousandth rate ceiling. They will go to the legislature, whose regular session begins Feb. 9, for consideration.
The proposals, said Lamont and Secretary of the Office of Policy and Management Melissa McCaw, come as the state projects a budget surplus of nearly $1.5 billion.
In an afternoon press release from the governor’s office released at the same time as his press conference, Lamont said Connecticut had a $3.7 billion budget deficit when he took office. three years ago.
“Today, Connecticut has a surplus, and we did it without widespread tax increases, and while making a historic investment in our retirement bonds and leaving the rainy day fund intact,” said Lamont in the release. “Connecticut’s fiscal health is stronger than it has been in decades, and now we can move on to the next phase of Connecticut’s comeback: lowering taxes for the people who live there.”
Property tax credit
Lamont proposes to restore full eligibility for the property tax credit, which would affect approximately 500,000 people. Currently, people over 65 or people with dependents are eligible for the tax credit. But Lamont’s change would allow all adults — who earn $109,500 or less for single filers and $130,500 or less for joint filers — to qualify.
He also proposes to increase the property tax credit from $200 to $300. The state estimates that these two property tax credit policies combined will have an impact of $123 million.
“I think we’re kick-starting the economies in our cities and towns, and that starts with property taxes,” Lamont told reporters Wednesday.
Pensions and annuities
Lamont is asking the Legislature to expedite the phase-in of the income tax exemption for pensions and annuities from 2025 to 2022. The exemption applies to single filers who earn less than $75,000 and filers spouses who earn less than $100,000.
“Accelerating the exemption three years earlier will have an estimated state budget impact of $42.9 million in (fiscal year) 2023, decreasing to $0 in fiscal year 2026, as the existing phase-in is already assumed in the consensus forecast,” the statement read. .
Student loan credit
The governor is seeking to expand a student loan tax credit that gives employers a 50% tax credit on up to $5,250 of an employee’s student loan payments.
“The program would leverage business spending alongside the state tax credit to significantly expand eligibility for all loans issued by the Connecticut Higher Education Supplemental Loan Authority,” the statement said. The policy would have an impact of approximately $9.4 million.
Car tax reduction
Lamont urged the legislature to lower the cap on the mill rate on motor vehicle property taxes that cities collect from car owners from 45 to 29 mills. The state would then reimburse the municipalities for the loss of revenue.
This would provide property tax relief for more than 1.7 million vehicles in 103 municipalities, more than three-quarters of the number of cars in the state. McCaw said the state would calculate reimbursements to municipalities using large listings and rates per mile submitted. About $160 million would go to municipalities.
“The motor vehicle tax reduction is an existing program that we are expanding. We have already demonstrated our ability to backpay communities in need,” State Department of Tax Services Commissioner Mark Boughton said at Wednesday’s press conference.
At the press conference, Lamont said he hoped these tax policies would not be one-time measures and that he believed they were “sustainable.”
“We’ve seen significant improvement with consensus earnings… Connecticut’s economy is very strong,” McCaw said. “If we continue on this trajectory, we believe these are lasting adjustments we can make to our fiscal policy.”
In a series of tweets, Republican gubernatorial candidate Bob Stefanowski criticized the governor’s proposals.
“These proposals don’t even begin to scratch the surface of reducing the affordability burden for Connecticut families and small businesses,” Stefanowski said.
Stefanowski also suggested cutting sales tax, which Lamont said at Wednesday’s press conference he has no plans to do.
Senate Republican Leader Kevin Kelly also responded to the governor’s proposals in a statement from his office.
“It must be an election year since the Democrats are talking about tax cuts. Unfortunately, there is no real relief here until next year! said Kelly. “Republicans have long called for relief on property taxes and pension taxes in particular. But we also need immediate relief.