Connecticut Governor Defends Refusal to Increase Taxes on Wealthy

6 mins read
Connecticut Governor Defends Refusal to Increase Taxes on Wealthy

By Joseph De Avila

Connecticut Gov. Ned Lamont’s centrist budget plan has put him at odds with a coalition of progressive lawmakers, activists and labor unions calling for tax increases to fund a more robust response to the economic crisis.

Mr. Lamont, a Democrat, proposed a two-year spending plan of $41.6 billion that included Democratic priorities such as legalizing recreational cannabis and new programs designed to address climate change.

Still, Mr. Lamont’s budget left the progressive wing of the Democratic Party unimpressed, in part because it includes no new major tax increases. Many said the governor’s spending plan failed to meet the urgency of the moment when many residents remain out of work because of the pandemic-fueled economic crisis. The state unemployment rate for December is 8%, while the January national jobless rate is 6.3%, according to the most recent figures available.

In an interview, Mr. Lamont defended his approach and said his budget plan directs “significant resources to those that are most in need.” The governor pointed out that his budget gives an additional $100 million to more than two dozen distressed cities and towns and boosts education funding by more than $200 million using federal funds.

“We are going to be providing more education funding to our towns and cities than ever before, I mean significantly more,” Mr. Lamont said. “Talk about standing up to the moment in time — that’s what we did on education.”

Republicans criticized Mr. Lamont’s budget for not identifying more clearly the revenue it was counting on. The governor’s plan calls for tapping the state’s $3.5 billion rainy-day fund if Congress fails to pass another stimulus bill with aid for the state. Better economic growth could produce improved revenue figures as well, and each option gives the state flexibility to avoid painful spending cuts, Mr. Lamont said.

But some of the most pointed criticism of Mr. Lamont’s spending plan has come from fellow Democrats.

“It’s middle of the road, but not at all strong enough or bold enough,” said State Rep. Anne Hughes, a Democrat and co-chairwoman of the progressive caucus in the state House of Representatives.

The Democratic-controlled state legislature is now working on drafting a counterproposal to the governor’s budget. A group of about 40 lawmakers in the state Senate and House are backing a $3 billion legislative package of new spending on housing, property-tax relief, a $500 stimulus payment for people who lost work during the pandemic and other items.

These Democratic lawmakers are calling for paying for these new programs with a host of new tax increases, including a 5% surtax on capital gains for individuals making more than $500,000 annually and raising the state’s top income-tax bracket to 12.696%, which would be the second-highest in the nation after California.

While Mr. Lamont’s budget doesn’t include income-tax increases, it does propose freezing wages for state workers. The State Employees Bargaining Agent Coalition, which represents public-sector unions, said in a statement that state workers have already made sacrifices during the pandemic and that it was time for the wealthy to pay more taxes.

“The people who are being asked to pay are the people who are least able to pay and the people who are making money hand over fist are being protected from paying a penny more,” said Sal Luciano, president of Connecticut AFL-CIO, which represents private and public-sector workers.

Mr. Lamont, who campaigned on not raising taxes, said he still hasn’t changed his mind. He said Connecticut, which increased income taxes in 2011 and 2015, earned a reputation for raising taxes like clockwork.

The state’s hot housing market gives Connecticut an opportunity to market itself to new residents when the state can afford to make big investments in education and can help struggling cities and towns without seeking out new revenue, Mr. Lamont said.

“Why would you want to raise taxes when you don’t have to?” Mr. Lamont said.

The Rev. Joshua Pawelek, a leader of Recovery for All, an alliance of community groups, faith organizations and labor unions focused on reducing income inequality, said his group plans a series of public demonstrations advocating for tax increases to pay for programs to benefit struggling families. The group held a car caravan rally Saturday outside Mr. Lamont’s home in Greenwich.

“The pressure campaign is just beginning,” Mr. Pawelek said. “This kind of public action is not going to let up.”

Write to Joseph De Avila at [email protected]

(END) Dow Jones Newswires

02-21-21 1014ET