Connecticut Gov. Dannel P. Malloy on Friday called on lawmakers to scale back some of the tax increases his administration helped negotiate in a budget that prompted some major employers, including General Electric Co., to discuss moving out of Connecticut.
The Democratic governor unveiled his so-called budget improvement plan, which rolls back nearly $224 million in tax increases over two years.
The two-year, $40.3 billion budget agreement, reached between the Democratic leaders of the General Assembly and Malloy’s administration, increases taxes by approximately $1.5 billion. Many of those tax changes affected businesses, prompting an unusual public outcry from the corporate community.
Malloy still praised the plan, which dedicates a small portion of the state’s sales tax to transportation improvements and local property tax relief. However, he said he heard the complaints.
“It’s a budget we should be proud of, but that doesn’t mean we shouldn’t continue to listen to the voices of Connecticut when it comes to improvements that we can make in this historic progress,” said Malloy.
Democratic leaders did not publicly sign off on Malloy’s plan to roll back the tax increases. House Speaker Brendan Sharkey, D-Hamden, said they will certainly take Malloy’s proposal “under advisement.” Legislators are returning this month for a special session to take up budget-related and other unfinished bills. No date for the special session has been set.
Under Malloy’s proposal, proposed sales taxes on car washes and parking would be scrapped.
His plan also reduces proposed tax increases on computer, data processing and Web services, capping them at 1 percent. Also, a proposal to change how corporations report their income would be deferred to Jan. 1 and the state’s tax credit cap for corporations would be raised from 50 percent to 55 percent.
In a written response, GE said: “The governor and the legislature should do the right thing for small and large businesses and the citizens of Connecticut to improve the economic vitality of the state.”
Aetna Inc., which also suggested it might leave the state, indicated the changes were a positive sign.
“While the Connecticut business climate continues to be very challenging, this announcement is a step in the right direction,” the insurer said in a statement. “We will review these changes in more detail and monitor developments through the special legislative session. ”
Malloy said he plans to ask the legislature for the authority to cut state spending up to 1.5 percent across the board. He said he’s also open to the General Assembly deciding where to make cuts to cover the tax increase-rollbacks.
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The governor met last Friday morning in private with Joe Brennan, the president and CEO of the Connecticut Business and Industry Association. Brennan has urged both the governor and lawmakers to change the tax package, saying he’s heard from many companies — in addition to GE, Aetna, the Travelers Companies Inc. and pharmaceutical company Boehringer Ingelheim — who made their concerns about the state’s business climate known publicly. Last week, the state of Indiana took out a full-page ad in the Wall Street Journal urging GE, Aetna and Travelers to consider moving there.
Malloy has not yet signed the budget bill. He said he expects his proposed changes could be included in the budget-related bills that still need to be approved during the special legislative session.
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