Governor's Budget Address: Lamont Seeks Major Sales Tax Changes

Matt Dwyer
February 20, 2019 - 4:17 pm

Associated Press

HARTFORD, Conn. (AP) — Gov. Ned Lamont has called for revamping Connecticut's sales tax system, offering a budget plan that would impose the 6.35 percent levy on a long list of additional goods and services.

The proposed sales tax changes are a key part of the Democrat's first budget, a two-year $43.1 billion tax-and-spending plan he presented to the General Assembly on Wednesday. The budget comes at a time when Connecticut still faces deficit challenges.

"Today, I am presenting you a budget which gives us the best chance to get this state growing again," Lamont told lawmakers during a joint address to the legislature.

The new fiscal year beginning July 1 is projected to be $1.5 billion in the red, while fiscal year 2021 is expected to have a $2.2 billion deficit.

"There are no easy choices," said Melissa McCaw, Lamont's budget director, referring to the plan which includes some controversial concepts, such as highway tolls. "There is pain throughout."

Lamont's plan extends the sales tax to a long list of goods and services, eliminating existing exemptions for items ranging from accounting services to vegetable seeds. While McCaw said Lamont, a former successful businessman, wants to impose a "level playing field," past governors have tried to pare tax exemptions but faced strong opposition from special interest groups.

The budget calls for increasing taxes on digital downloads and hotel rooms, eliminating the sales tax free week, imposing a 10-cent surcharge on plastic bags, and adding a 25-cent deposit on wine and liquor glass bottles. It also would increase taxes on electronic cigarettes and set 21 as the age to legally buy cigarettes. McCaw said there are no changes to the sales or income tax rates in the budget package.

Lamont says he wants to meet with state employees to find budget savings, but he's not threatening layoffs.

The Democrat said Wednesday some people believe Connecticut needs a "Wisconsin Moment," where the state would "walk away from collective bargaining and tear up the contracts." Instead, Lamont says he wants an "anti-Wisconsin moment — a Connecticut moment," where Connecticut shows collective bargaining works for everyone.

Lamont says he plans to build on a program that provides state employees cash incentives for choosing cost-effective health services.

He's also seeking cost of living adjustments for future retired state employees. And his plan would also restructure the state's underfunded teacher's retirement plan.

The former businessman is also seeking a $15 an hour minimum wage and a paid family medical leave program.

Lamont says he's hoping to work with Connecticut lawmakers on two new potential sources of revenue: sports betting and recreational marijuana sales.

The Democrat did not include details about either concept in his new two-year budget, which he unveiled on Wednesday.

But Lamont listed sports betting, internet wagering and marijuana legalization among the new sources of revenue that must be enacted. During his address, Lamont said legalizing recreational marijuana like Connecticut's neighbors "will make for a safer market that will be carefully regulated and taxed."

Lawmakers have begun debating some of these issues, but it remains unclear if legislation will pass this session, which adjourns June 5th.

Lamont's budget also does not refer to additional casino gambling in the state, another issue lawmakers will be debating.

The budget proposal is getting mixed reactions from Connecticut lawmakers.

Republicans, the General Assembly's minority party, voiced concern Wednesday with the large number of taxes in the Democratic governor's two-year $43.1 billion budget proposal.

The list ends tax exemptions on newspapers, winter boat storage and bicycle helmets. Lamont also wants a 1.5 cent-per-ounce tax on sugar-sweetened beverages, prompting Republicans to put Big Gulp cups from 7-Eleven on their desks for Lamont to see during his budget address on Wednesday.

House Minority Leader Themis Klarides says it's "slightly disingenuous" for Lamont to say he's not increasing the 6.35 percent sales tax rate when he's nixing so many exemptions.

House Majority Leader Matt Ritter is urging lawmakers who oppose the sales tax changes to "give us your ideas."