Stateline Story

Connecticut Governor, Lawmakers Agree to Package of Tax Hikes

More insistently than any other governor this year, Connecticut's Dannel Malloy has pushed tax increases as the tough medicine necessary to help close a multi-billion dollar budget shortfall. On Wednesday (April 20), Malloy took a big step forward in his controversial plan, announcing a deal with legislative leaders that would help erase the state's deficit but make life more expensive for almost all Connecticut residents.

Under the agreement, announced at the Capitol just after 5 p.m., the General Assembly would raise taxes on income, corporations, inheritance, alcohol, cigarettes and gasoline, The Hartford Courant reports . According to the Courant , the sales tax on retail items also would increase from 6 to 6.35 percent, though the deal does not include some other sales-tax changes - such as applying the tax to haircuts - that Malloy had sought.

In all, the agreement between the Democratic governor and Democratic legislative leaders raises taxes by nearly $1.5 billion to help close a shortfall estimated at $3.3 billion, or about 18 percent of the current overall budget. Malloy and lawmakers want to resolve the remaining shortfall by reducing spending and negotiating concessions from state workers, though it is still unclear whether public employees will go along with cuts of the magnitude being sought.

Republicans wasted little time in criticizing what they see as a one-party power grab that ignores the will of Connecticut residents, many of whom protested against the governor in recent weeks as he went on a statewide tour to discuss his budget proposal.

"Governor Malloy and the Democratic majority have let down the people of Connecticut," Senate Republican leader John McKinney told the Courant . "This massive and unnecessary tax hike flies in the face of the unanimous public outcry against unsustainable government spending and higher taxes.''

But Malloy has not backed down from his unconventional approach toward balancing the budget, as Stateline noted in a profile of the new governor on Wednesday. Beyond pushing tax increases - which most governors are loathe to do - Malloy also has refused to slash funding for localities, arguing that a shift in the tax-increase burden to municipalities will do nothing to improve life for residents.

The budget deal announced Wednesday now must gain the support of rank-and-file lawmakers in the Connecticut General Assembly.