The New Haven Board of Aldermen unanimously resolved to support the creation of a state Earned Income Tax Credit Tuesday evening by backing an EITC bill currently under discussion in the state legislature.
The bill, which would establish a tax credit to help low-income working families, has been heavily pushed by members of the Yale Democrats and Project Opportunity, many of whom will be traveling to speak in favor of the bill at a hearing of the Human Services Committee of the state legislature on Thursday. New Haven Mayor John DeStefano Jr., who is currently seeking the Democratic nomination for governor, has already declared his support for the creation of a state EITC.
But some members of the state legislature have questioned the merits and practical realities of the EITC proposal. The bill has failed in previous years, and because this year’s legislative session is unusually short — scheduled to end May 3 — some state representatives said they doubt the legislature will have adequate time to consider the bill.
The EITC, which already exists on the federal level and in 19 other states, refunds a percentage of income tax to low-income residents and ensures that the money only goes to individuals who are working. And because those families often have low rates of saving, according to experts on Connecticut social policy, most of the money is spent locally, on rent and items such as groceries. According to “The High Cost of Being Poor in New Haven,” a report issued by the Annie E. Casey Foundation, New Haven residents received nearly $20 million of federal EITC money in 2002.
“The EITC fits the definition of a progressive policy to a T,” Ward 1 Alderman Nick Shalek ’05 said. “It creates incentives and rewards people for working hard … and has the added benefit of really supporting the local economy, as the people who get the money go out to local [stores].”
Yale College Democrats President Brendan Gants ’08 said the lobbying coalition has planned meetings with a number of state representatives Thursday to explain how the bill can effectively reduce poverty among the working poor.
“The legislature has a lot on its plate, but we think we’ll get a good reaction at the Human Services committee,” he said. “There’s a lot of support for this in Hartford right now. The major question is whether people will push it hard enough and keep the pressure on.”
But some Republicans in the state legislature said they would not support the bill because it would add an additional level of complexity to the tax system.
“I’m somewhat against all these tax credits, and I think we ought to have an up-front tax structure that’s stable and predictable,” said state Rep. Richard O. Belden, a Republican from Shelton and deputy minority leader-at-large. “There hasn’t been a lot of support for this in the past, or it would have moved forward in Connecticut.”
Belden, a member of the state Finance Committee, also said he does not think significant changes to tax policy are likely, considering the short length of the session.
State Sen. Martin Looney, the Democratic majority leader, said the Human Services, Finance and Appropriations committees, as well as the full state Senate and House, all have to approve the bill before it becomes law. Nevertheless, speaking at a press conference Monday organized by a group of students — from Yale, the University of New Haven and Southern Connecticut State University — who are lobbying for the bill, Looney said he is optimistic about the bill’s prospects.
“Certainly it is a very high priority for Connecticut Senate Democrats,” he said. “This is the year we should move on it, because something like this needs to be done in good economic times.”
Gov. M. Jodi Rell announced that Connecticut’s projected budget surplus for this year rose to $511.8 million in January. Last year, the state had to cut costs and raise certain taxes to address a budget deficit greater than $1 billion.
The Board of Aldermen also unanimously approved a new contract Tuesday between the city and Connecticut Independent Labor Union Local 71, which represents some city employees, including mechanics and parks workers. The new contract gives employees annual raises, but also increases the amount they must pay toward their health insurance.