(UPDATED) HARTFORD, CT – On the eve of Gov. Ned Lamont’s budget address to the General Assembly, Senate Republicans revealed a tax relief plan that hinges on state employees agreeing to a two-year salary freeze to save the average Connecticut family about $1,000 a year beginning in 2026.
The $700 million plan would see the personal income marginal rates cut from 2% to 1%, and a payroll tax cut from 4.5% to 4%, which the Senate Republicans say would save an average family $1,000 per year beginning in 2026, with further savings coming into effect in 2028. The plan requires the State Employee Bargaining Agent Coalition (SEBAC) to come to the table and agree to a two-year salary freeze.
“I first ran for office as a state rep a few years back because I was sick and tired of seeing my parents, friends leave because they couldn’t afford to live here in their retirement years,” Senate Minority Leader Stephen Harding, R-Brookfield, said. “I was sick and tired of seeing my friends leave with young families because they couldn’t afford to live here on their budgets. And it’s about time that we make this state more affordable. One time we were a tax-haven in this state. And I think we can get back to that with the good economic and fiscal policies that we’re going to present to you here today.”
Following the Republican news conference, Democrats responded by saying the Republican plan was “pure politics” and their effort to save money involves eliminating tax exemptions that are already applied to goods that many Connecticut residents rely upon.
“Their plan is really about tax cuts for millionaires and billionaires, and it’s about freezing wages for working people,” said Senate Majority Leader Bob Duff, D-Norwalk. “And they’re talking about looking at $10 billion of tax exemptions that we already have in the state, so Republicans are saying they want to tax groceries. Republicans are saying they want to tax your home heating oil or your home heating gas. Republicans are saying that they want to tax your prescription drugs. And in fact, the worst thing is that Republicans are now saying they want to tax your flag, because that is tax exempt too. So when it comes to their plan, their plan is really just for millionaires and billionaires.”
Senate President Martin Looney, D-New Haven, went further in his criticism of the Republicans’ plan, stating that Democrats had already accomplished what the Republicans are proposing by cutting $600 million from the state income tax in the last couple of years, and lowering the rate on the two lowest tiers of income.
“They are desperate to try to shift the narrative away from the terribly punitive things and irresponsible things that the Trump administration is looking to visit upon Connecticut, and the depths of that we don’t know yet,” Looney said. “Republicans talk about being the adults in the room, but they are the cowards in the room for what they’re talking about doing at this time. Desperately flailing away and not willing to even acknowledge the reality and the enormity of what’s coming out of Washington.”
Another major component of the plan Republicans outlined would institute a property tax cap for municipalities beginning in 2028. Towns and cities would be restricted to increasing taxes by the greater of either 2% or the rate of inflation, based on their grand lists. Towns would be able to override the tax cap with a referendum vote that achieved 60% support or greater. Senate Republicans plan to institute a task force to examine and roll back the 1,400 unfunded mandates that they say the state imposes on municipalities.
Republicans said how they would fund a lower tax rate depends on the findings of the Tax Expenditure Working Group, a bipartisan task force seeking to simplify the state’s tax code by identifying those that are redundant, obsolete, duplicative, or inconsistent. Republicans are hoping to find at least $1 billion in savings among the $10 billion worth of special tax expenditures that the task force will be examining.
“This is a great state, with all the attributes necessary to succeed fantastically,” said Sen. Ryan Fazio, R-Greenwich. “We have a smart, educated workforce. We have a great location, natural beauty, and strong communities. And yet, in every single ranking of economic and job growth and economic opportunity, Connecticut sits in the bottom 10 or 15 across the country. That cannot be blamed on our constituents. It can only be blamed on the policies in this building. The people deserve better leadership, and this plan is about delivering that for them.”
Other highlights of the plan include:
- Cutting licensing fees and reducing filing fees;
- Reducing the half-percent state payroll tax for Paid Family Medical Leave;
- Permanently extending the fiscal guardrails, and;
- Tightening the bonding cap.
Sen. Heather Somers, R-Groton, described a conversation she had with a family in her district she called the Lanes, which makes a combined income of $125,000. She said that while that income would be comfortable for a family in most other states, the cost of living in Connecticut had become so high that they were considering leaving the state.
“So how is a young family, or any family really in that income bracket able to make this work in Connecticut?” she asked. “How are we giving Connecticut’s middle-class families the tools necessary to go ahead to build a family here and a life here in Connecticut? To lay down roots in the state and want to stay? We’re not, and we haven’t. And now families like the Lanes and others are looking to other states that have more to offer. You hear Florida, Texas, Tennessee, but other states in our neighborhood are becoming those states also.”
When asked whether constituents should see the Republican plan as virtue signaling based on their minority party status, Fazio said regular citizens expect their elected officials to provide ideas to put the state in the right direction regardless of their ruling status.
“I think this should be viewed as thought leadership and leadership generally,” he said. “Even if our party is in the minority, people elect us to provide ideas that will help provide solutions to the state and make quality of life better and reduce cost of living. This is a genuine proposal that we believe will do that in a way that is fair and equitable to residents of the state.”