National News

Governor's last-ditch budget compromise includes rise in sales tax

Posted September 8

— Connecticut's governor presented his new state budget proposal on Friday, which he called a "compromise" with lawmakers.

Gov. Dannel Malloy spoke about it during a 10 a.m. news conference.

In it, he agreed to a raise in the state sales tax rate to 6.5 percent from 6.35 percent and raise the sales tax on restaurants to 7 percent.

However, only if lawmakers agree to spending cuts and structural changes.

The sales tax would still be lower than New York, New Jersey and Rhode Island, Malloy said.

Malloy said those changes would result in revenue gains of $87 million for fiscal year 2018 and $133 million fiscal year 2019.

"We cannot continue down a path of operating the state without an adopted budget – we must meet one another in the middle," Malloy said. "To reach compromise, I have scaled back some of my proposals, I have adopted some of the best ideas from legislators of both political parties, and I have tried to be responsive to the needs of municipalities within the limited resources the state has at its disposal. This budget represents real, structural change, and it uses new revenues only as a last resort after achieving historic labor concessions and making hundreds of millions of dollars in difficult spending cuts."

This was the third proposal for a state budget that the governor has put forward.

"I was confident in January that people would realize reality. I was confident in February that people would realize reality," Malloy said. "Every time we put out a budget or executive order, that people would realize reality. I was wrong. It's time now that people recognize that damage will be done and additional tens of millions of dollars will be lost each and every month there's not a budget."

Until this week, Malloy was against the Democrats' proposal of raising the sales tax.

In exchange for it, he said he wants structural changes when it comes to cities and towns. He wants municipalities to help pay some of the costs for teacher pensions. Though, the newest plan is less than what he originally proposed. He also wants changes in how education funding is given to cities and towns.

Malloy's formula would be based on need.

The state has been operating without a state budget for 70 days and people impacted by that said the pain is growing by the day.

For months, it's been all talk and no action in the capital.

Democrats and Republicans have failed to come to an agreement on a spending plan.

Malloy said he made some compromises he hopes will get the deal done. He said the last-minute changes were made to get lawmakers to act.

In a preview released on Thursday, he said he is willing to increase aid to cities and towns by roughly $25 million over two years.

He also backed off on his proposal to make cities and towns pay more for teacher pensions.

Lawmakers are expected to return to the capitol on Thursday.

If an agreement is not reached by the end of September, the pain will really be felt in school districts, who will have to lay off more teachers.

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