The state’s legislature is currently considering a $55-per-person refund to taxpayers, a bill propelled by the Governor and questioned by voters who call it a “political gimmick.”
The bill passed through the Finance Committee with a vote of 31-19, a party-line vote with the exception of one opposing Democrat. The refund comes from the state’s over-$500 million surplus, and if passed, will be part of more than $210 million in tax cuts this year. It is expected to pass through the legislature by the end of the session on May 7, according to Senator John Fonfara, a Democrat from Hartford and the co-chair of the finance committee.
“The governor asked for a shared sacrifice when we were at our lowest point in the last five years,” Fonfara said. “Now that we’re seeing some light at the end of the tunnel, the folks who sacrificed should benefit from this recovery.”
Although the bill has been called a tax “rebate” in the past, Democratic leaders claim that was incorrect terminology. Tax refunds, unlike rebates, do not go into the calculation of a person’s income, meaning the $55 will not affect income taxes.
In his statement last week, the governor thanked Fonfara and Representative Patricia Widlitz, a Democrat from Guilford, and the other finance committee chair for their role in helping push the legislation through the committee.
“If Connecticut taxpayers are asked to share in the sacrifice during tough times, they should also share in the state’s continuing economic recovery,” Malloy said in the statement. “The bill the committee passed today takes us a big step towards that goal.”
In 2011, the Governor passed sweeping tax increases in an attempt to help Connecticut recover from the recession.
Widlitz, who estimates that the tax refund would be implemented at the earliest in August, said some parts of the budget might be changed when legislators sit with the Governor’s budget secretary. But the basic structure of the budget will remain unchanged, she said.
She called the refund a “symbolic refund” to give back to voters and acknowledge that they have been burdened in the past.
However, a poll released last month by Quinnipiac University suggested that 63 percent of voters view the tax refund as a “political gimmick” used by the governor in his election year. Senator L. Scott Frantz, a Republican from Greenwich and the ranking minority member on the finance committee, said people on both sides of the aisle see it as a election ploy.
“[The Governor] understands the game extremely well,” he said. “There’s a decent chance that the refund will backfire.”
At 89 percent, Republicans were most likely to say it was a gimmick. Democrats on the other hand were more divided, with 41 percent calling it a gimmick and 39 percent saying it was “good public policy.”
Fonfara said, however, that he thinks Malloy’s work over the last several years showed that the refund is genuine.
“I think people understand that [the governor is] in there working hard on the job every day, and he made the tough calls to ask people to sacrifice for the budget,” he said. “It’s not like this started in the election year.”
Widlitz agreed with Fonfara, adding that the refund will not hurt his campaign. Frantz and many other Republicans on the finance committee argued that the money from the surplus should go to help pay off the debt instead. Representative Ted Moukawsher, the Democrat who voted against the bill in the finance committee, also used that argument on the floor of the legislature during the debate explaining his opposition.
Around $250 million of the surplus will go towards the state’s rainy day fund, and $100 million will go toward retirement benefits, according to Widlitz, who maintained that Democrats were “making a serious commitment” towards financial stability.
Fonfara said that Malloy has done more to reduce the size of the long-term debt than any governor in the last 20 years. In the Quinnipiac poll, 63 percent of voters disapproved of Malloy’s handling of taxes, and 53 percent disapproved of his handling of the budget.
“Gov. Dannel Malloy gets great marks for his handling of the snowstorms, but low marks for voter priorities, the economy and jobs, taxes, education and the budget,” said Dr. Douglas Schwartz, the director of the Quinnipiac University poll, in a statement.
The finance committee recently passed a bill calling for a major study of the state’s tax policy mirrored after what New York did recently under Governor Andrew Cuomo. Fourteen percent of voters in the Quinnipiac poll said taxes should be the governor’s top priority.