House Republicans this week unveiled a $35.2 billion spending plan that targets funding for such priorities as education, health care and energy, but contains no tax increases.
The plan relies on more favorable revenue forecasts over the next two years than used in other budget proposals, and some surplus money, to increase funding without raising taxes.
The proposal calls for approximately $17.3 billion in spending in the first year of the biennium and $17.9 billion in the second, with the budget exceeding the spending cap in the first year by $390 million and coming in under the cap in the second by $170 million.
The House Republicans’ “No tax increase” plan draws down $619.2 million of this year’s currently projected $628 million state budget surplus to meet critical needs and avoid tax increases.
Initiatives in the House Republicans’ plan include increasing education cost sharing funding for every municipality, fully funding teachers’ pensions; increasing Medicaid reimbursements to hospitals and cost of living adjustments for nursing homes and private providers; increasing aid to municipalities’ PILOT programs; and $20 million for a first-time home buyers’ program for college graduates to keep them in Connecticut.
It also restores $26 million to the state’s Energy Conservation and Load Management Fund.
School accountability is also part of the plan, with school systems in which students’ Master Test scores show year-to-year improvement eligible for additional support in order to encourage greater accountability and better performance. And it eliminates the educational cost sharing increase cap of 6%.
The Republicans’ “No tax increase” plan also includes several tax reductions, including:
- Eliminating the annual business entity tax
- Eliminating the sales tax on electricity for businesses
- Phasing out the state income tax on pensions
- Phasing out the estate tax and eliminating the “cliff”
- Tax credit for individuals and small businesses purchasing health insurance
House Republicans said that with the state registering such as substantial budget surplus, it makes little sense to consider tax increases. Connecticut will have a sizable budget surplus — and it could get bigger by the end of the fiscal year — in major part because of stronger than projected revenues from the state’s corporate income tax. According to the state comptroller, the corporate income tax will bring in $109.9 million more than original estimates.
Both Gov. Rell and House Speaker Amann responded to the Republicans’ plan by saying ideas contained in it would be considered during the upcoming budget negotiations.