Gov. Dannel Malloy released a plan Wednesday to close a $208 million state deficit this year by offering a combination of cuts to social service programs and tax increases on cigarettes, hotels, and the state sales tax.
In his press release, the governor acknowledged that the options he presented “will be almost universally objectionable, and that there is little appetite among you or your members for making such adjustments to your budget.”
“I agree these changes are difficult and that in better economic times, with a balanced budget, none of us would put them on the table for consideration,” Malloy said. “However, I have a clear statutory obligation to provide you with a plan to mitigate the deficit.”
Malloy’s plan results in $189 million in revenue increases, coupled with $113 in spending cuts. The package of cuts and tax increases is $100 million more than the deficit requires. Malloy says this will help the legislature revise some of its cuts to the Medicare Savings Program.
One of the largest revenue generators in Malloy’s plan comes from
raising the state sales tax to 6.9 percent, which is estimated to generate $81 million in 2018. Increasing the sales tax was a major part of Democrats’ budget plans during the 2017 session, but was ultimately left out of the bipartisan budget.
Malloy also included raising the hotel tax to 17 percent; increasing the restaurant tax to 7 percent; raising the tax on cigarettes again by another 25 cents; a 75 percent excise tax on e-cigarettes and an increase to the real estate conveyance tax — something that realtors have lobbied strongly against.
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