By Ana Radelat

Washington — “Blue” states like Connecticut that fought against the Trump tax plan’s cap on state and local tax deductions are now seeing a silver lining — people turned to municipal bonds to lower their tax burden, which in turn lowered borrowing rates for state governments.

The new tax law capped the amount of state and local taxes, known as SALT, that taxpayers could deduct from their federal income tax at $10,000 this year. That drew howls of protests from “blue,” or Democratic-leaning, states whose taxpayers would more likely be hurt by the cap on deductions.

Connecticut joined a number of other states, including New York, California and New Jersey, to sue to block that change because their states have high costs of living, high incomes and high state and property taxes that, before the change, provided their residents with a valuable tax break.

But, having lost that tax break, there’s been a rush by taxpayers this year to replace it with municipal bonds which act as a tax shelter for income and can lower a person’s federal tax burden, and in some cases, their state and local tax burdens, too.

By Mark Pazniokas

Gov. Ned Lamont today used his first cabinet meeting and lots and lots of hyphens to publicize a plan to transform state government into a cross-agency, data-driven, user-friendly, cost-effective and outcome-obsessed model of streamlined efficiency and private-sector discipline.

“It’s my goal to make Connecticut one of the nation’s most cost-efficient, data-informed, results-driven states,” said Lamont, the founder and former owner of a small cable-television company. “Taxpayers deserve it and businesses expect it.”

David Wilkinson was introduced as the state’s new chief performance officer. He was the director the White House Office of Social Innovation and Civic Participation under President Barack Obama, the commissioner of early childhood under Gov. Dannel P. Malloy, and the leader of a technology group for the Lamont transition.

The new effort, Wilkinson told the governor and agency heads, is “an opportunity to generate more value with the dollars we currently spend.”

By Keith M. Phaneuf and Mark Pazniokas

Democratic legislators are proposing a tax increase on the investment income of Connecticut’s wealthiest households to help close the state budget deficit, putting them on a collision course with a Democratic governor opposed to raising any tax rate.

This proposal is expected to enjoy strong support from leaders in the House and Senate’s Democratic majorities, but Gov. Ned Lamont has said he opposes any effort to raise the income tax, arguing it would weaken Connecticut’s economy and drive wealthy taxpayers from the state.

“I’ve been pretty strict on not raising tax rates,” Lamont reiterated Thursday. “Everybody comes in and goes, ‘C’mon on gov, it’s just a half a point. It’s just another point. It’s not that big a deal.’ But it’s the fourth time in 12 years or something like that.”

The proposed levy would apply 2 percentage points only to income from capital gains and only to households already paying the top state income tax of 6.99 percent. This applies to single filers earning more than $500,000 annually and couples topping $1 million.

By Keith M. Phaneuf and Jenna Carlesso

Connecticut cities and towns could face as much as $24 million in increased costs by 2022 if lawmakers raise the minimum wage to $15 an hour, estimates from state analysts show.

The nonpartisan Office of Fiscal Analysis also warned that the wage hike could add nearly $7 million in expenses to child care providers who participate in the state’s Care4Kids program.

Meanwhile, municipal advocates cautioned that unless legislators are prepared to bolster state aid and carve out some new exceptions to the minimum wage standard, the increase would exacerbate problems for already lean local budgets.

“Municipalities only have a couple of options,” said Betsy Gara, executive director of the Connecticut Council of Small Towns. “They can increase taxes or cut services. There is no Door No. 3.”