Malloy's $40 Billion Budget Calls For Tax Increases, Labor Savings

Feb 8, 2017

Connecticut Governor Dannel Malloy presented a two-year $40.6 billion budget proposal to lawmakers at the state Capitol in Hartford on Wednesday. The plan calls for $1.5 billion in state employee givebacks and shifts about $400 million in teacher pension costs to cities and towns. It also includes about $200 million in new taxes.

In announcing his plan before a joint session of the Connecticut General Assembly, Malloy acknowledged that many of the ideas in his budget will not be popular, but he asked lawmakers to work with him.

“We should remember that we are in this together. It’s about more than how my town, or my community, or my family did. It’s also about neighboring towns, neighboring communities and neighboring families as well. We will rise or fall together.”

Malloy said that right now the teacher system is rigged against poor urban areas. Towns with deep pockets can hire more teachers and pay them better all while the state picks up the pension costs. Malloy compared Greenwich to New Britain.

"That's 25 percent less funding to system with 14 percent more students. I'm not blaming wealthy towns for this inequity. It's not their fault. But we need to make the system more reasonable," Malloy said.

The total tax shift would be about $408 million dollars in 2018. Most local taxpayers would see their local bills go up. But 31 towns would net more money for schools.

Kevin Maloney, spokesperson for the Connecticut Conference for Municipalities, said, "That is very important. We’re hoping to find a plan that doesn’t take the aid from one set of towns to give to another, that we can find a solution that would be helpful to all towns.”

By 2019, local municipalities would see the teacher pension bill increase to $420 million dollars. Maloney called the plan unsustainable.

The plan also increases taxes by $200 million and allows cities and towns to tax hospital property. It eliminates the $200 property tax credit on state income tax returns and reduces the earned income tax credit for poor families. Malloy told lawmakers his goal is to create jobs by having wealthier communities shoulder more of the tax burden.

“More jobs in Waterbury means more jobs in Cheshire and Beacon Falls. A more vibrant New London means a more vibrant Ledyard and Montville. We can lift one another up or we can drive one another down. Our future depends on the decisions we make today. This session.”

Themis Klarides, the Republican leader in the state House of Representatives, is not convinced by the Democratic governor. She said Malloy’s plan is universally unpopular and would hit Connecticut’s middle class the hardest by shifting the tax burden to cities and towns.

The state’s divided legislature will now begin revising the budget. They have until June 30 to reach a compromise.