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Connecticut looks to cut taxes after years of fiscal strife

Lamont's two-year, $50.5 billion budget plan would reduce personal income tax rates.

HARTFORD, Conn. — Nearly a decade after Connecticut was infamously described as being in a “permanent state of fiscal crisis," struggling year after year to balance deficit-ridden budgets, Democratic Gov. Ned Lamont on Wednesday proposed the state's first income tax reduction in nearly 30 years and its largest ever.

Lamont said the state's fiscal health is now the strongest it's been in decades, enabling officials to finally focus on addressing Connecticut's nagging reputation of being a high-cost state.

“For the first time in over a generation, Connecticut has enjoyed strong economic and population growth," he told a joint session of the Democratic-controlled General Assembly. "And more taxpayers, a growing economy, coupled with our shared fiscal discipline, has resulted in four consecutive balanced budgets, soon to be five.”

Lamont's two-year, $50.5 billion budget plan, which still needs legislative approval and faces some pushback from liberals in his party who support raising taxes on the wealthy, would reduce personal income tax rates.

Lamont formally proposed that for the first time in 30 years, a personal income tax cut for working families and the middle class. His proposed 31% increase in the earned income tax credit, which Lamont considers one of the most impactful things to target direct relief to more than 200,00 low-income workers.

"Thanks to these two reforms, families earning less than $50,000 a year will pay no state income tax. Families earning less than $60,000 will receive a 20% tax cut. Less than $150,000, a 6.5% tax cut worth $500," Lamont said in his speech.

The proposed budget increases childcare rates by 10% a year each year for the biennium in the state's largest childcare program, Care 4 kids. Lamont's proposed budget incentivizes employers to help their employees with childcare. Lamont proposed to provide employers with a corporate tax credit of 25% of the cost of any childcare cost subsidies provided to employees. 

"Our commitment to daycare in this fiscal year kept more of our centers open, provided up to $70 million in wage support payments for childcare workers, and $25 million to subsidize 1,300 additional slots for infants and toddlers," said Lamont. 

The budget will also increase ECS by $135 million to add to the $720 million in federal resources still to be invested into education over the next few years. Emphasizing the recruitment and retraining of teachers. An additional $10 million for flexible grants to help districts address staffing shortages. As well as $7 million for the LEAP program to get kids back in the classroom. 

Lamont and state legislators credit a package of bipartisan fiscal “guardrails” imposed in 2017 for leading to billions of dollars in surpluses in recent years. Those budget controls, which the General Assembly is expected to renew on Thursday, include caps on spending and revenues, including potentially volatile stock market earnings that Connecticut has traditionally relied on heavily.

With 100,000 unfilled jobs, Connecticut is going to offer rewards to employers who provide on-the-job training. 

Lamont proposed an additional $200 million for workforce housing. 

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"We project increasing the number of new housing units built in Connecticut by 6,400 units over the biennium. Time is money and the housing trust fund will allow developers to move quickly, with an emphasis on multi-unit housing in downtown areas close to transportation," Lamont said.

 An additional $50 million each year will go into the Time-to-Own program to assist low and moderate-income families with down payment and closing costs.

Lamont announced $250 million in funding for small businesses across the state with a focus on low-income and underserved communities. 

In addition to housing, Lamont said over $800 million in additional federal support to strengthen and speed up the transportation system. 

"We have clear goals over the next ten years. We will reduce travel time from New Haven to New York City by over 20 minutes; run Metro-North trains directly to Penn Station. You will see new and improved cars on the Hartford Line, and Metro-North will have improved 5G connectivity," Lamont said. 

The state will also be making a $55 million down payment on state electric vehicles and charging stations, Lamont said in the proposal. 

To see the proposed budget slides click here

To see the budget documents click here

Jareliz Diaz is a digital content producer at FOX61 News. She can be reached at jdiaz@fox61.com


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