By Keith M. Phaneuf, Jacqueline Rabe Thomas, and Mark Pazniokas

Republican legislators today unveiled a two-year budget plan that rejected controversial proposals to pass teacher pension costs onto towns and to expose nonprofit hospitals to local taxation.

But the GOP plan, which also would eliminate a program to share sales tax receipts with municipalities, is out of balance by more than $1 billion because of recent, massive erosion in state income tax receipts.

The budget Gov. Dannel P. Malloy offered in early February and the proposal majority Democrats on the Appropriations Committee crafted but did not vote on this week also face similar massive shortfalls.

Still, Republicans insisted their $35.7 billion plan offers a valuable template legislators could follow to close a major projected deficit — probably approaching $4.7 billion over two years — while minimizing impact to taxpayers.”

By Keith M. Phaneuf

Plummeting state income tax collections are experiencing their worst decline since the last recession, falling $450 million below anticipated levels for April — one-and-a-half times the free fall projected just one day ago.

More importantly, the escalating erosion means income tax projections for the next two fiscal years must be downgraded by $500 million and $600 million, respectively, Gov. Dannel P. Malloy’s administration said today.

That adds $1.1 billion to an already daunting $3.6 billion deficit forecast, all but shattering hopes of avoiding tax increases or big municipal aid reductions in the next budget.

The new trend also means the state probably will close its third successive fiscal year in deficit and deplete its $235.6 million emergency budget reserve.

By Keith M. Phaneuf

Gov. Dannel P. Malloy today asked legislative leaders to meet with him next week to plan a bipartisan response to state income tax receipts declining by “hundreds of millions of dollars.”

The governor did not identify how severe the decline is likely to be before his budget staff and nonpartisan analysts complete their latest assessment, which is due Monday.

But the legislature’s nonpartisan Office of Fiscal Analysis — which prepares a daily update on income tax collections after the April 18 filing deadline — notified lawmakers today that receipts for April were running $293 million below originally anticipated levels.

That’s a revenue shortfall of 20.4 percent.

By Ana Radelat

Washington — The new tax plan released by the Trump administration today would slash taxes for corporations and eliminate the estate tax, double the standard deduction and reduce the number of tax brackets from seven to three.

The federal tax code overhaul, which the Trump administration calls the first of its kind since 1986, also would eliminate many deductions used by those who don’t take the standard deduction to lower their taxable income — including deductions for state and local taxes that would disproportionately impact high-income states like Connecticut.

But the Trump plan would keep the mortgage interest deduction and the charitable donations deduction in place. Trump’s plan also would boost the tax break for child and dependent care expenses.

But the proposal is only an outline, lacking key details, including the income levels that would be subject to the pared-down tax brackets of 10 percent, 25 percent and 35 percent. White House officials say they haven’t specified which income levels would hit the higher tax brackets because that’s part of ongoing discussions with Congress.

By Mark Pazniokas

Connecticut saw a preview today of what a fiscal deadlock looks like in a closely divided General Assembly: A fragile Democratic majority unable to unite behind a spending plan, and a Republican minority unwilling to step into the void and share responsibility for a budget destined to be poison at the polls in 2018.

Reporters and lobbyists surround Senate President Pro Tem Martin Looney and other Democrats after the Appropriations Committee adjourned without a budget vote. (CLICK TO ENLARGE) Mark Pazniokas for CtMirror.org

With an eye on upcoming campaigns for governor and the legislature, leaders of the two parties blamed each other for the failure of the Appropriations Committee to vote on a spending plan, as well as the expectation that the Finance, Revenue and Bonding Committee won’t even attempt a vote on a tax package before its deadline Friday.

The fight left unanswered a key question: How will the General Assembly agree by its constitutional adjournment deadline of midnight June 7, or at least by the start of the new fiscal year on July 1, on an unpalatable mix of spending cuts and new revenue to close a shortfall of about $1.7 billion in an annual budget of $20 billion?

To pass a budget in the evenly divided Senate, Democrats need the unanimous agreement of their 18 members, plus the tie-breaking vote of Lt. Gov. Nancy Wyman. In the 151-seat House, Democrats can afford no more more than four defections in a caucus that has five members who voted with Republicans against the budget last year.
tart to govern.”