Are CT tax cuts and COVID relief enough? Debate goes on
After a spring of high gasoline prices and a summer that saw inflation top 9%, Connecticut Democrats reminded voters last week of the dollars the state is putting back into family budgets.
But even as Gov. Ned Lamont was reminding shoppers to take advantage of another sales tax-free week and watch their mailboxes for child tax rebate checks, Republicans noted the state’s track record at getting relief out the door is spotty at best.
One program to help essential workers who caught COVID has disbursed less than 2% of its funds after seven and a half months.
A second relief program for essential workers is wildly popular — but appears likely to begin shrinking grants because of a shortage of funds.
And even the child tax rebate, the linchpin of Democrats’ summer relief program, left $32.5 million — 26% of the rebate’s $125 million budget — unclaimed.
‘Christmas in August’
“This is Christmas in August,” Lamont said Wednesday as he stopped at Fleet Feet, a West Hartford athletic shoe and sporting goods store, to promote the sales-tax holiday that will run from Sunday, Aug. 21 through Saturday, Aug. 27. “It represents real savings.”
“Governor Lamont and I continually strive to find ways to make our state more affordable,” said Lt. Gov. Susan Bysiewicz, who was scheduled to join Democratic candidates for treasurer, secretary of the state and the General Assembly Thursday afternoon in Hartford to tout affordability initiatives.
The sales tax-free week on most clothing and footwear items priced under $100 — normally offered annually in August — is the second one Lamont and his fellow Democrats in the legislature’s majority ordered this year.
The first — which saved shoppers an estimated $3 million — happened back in April, around the same time Democrats also suspended the state’s 25-cents-per-gallon retail gasoline tax from April through June.
They would follow that up in May with a $660 million relief package that ordered the second sales-tax-free week in August; extended the gasoline levy holiday through Nov. 30; and established a mix of one-time and ongoing tax cuts.
Besides the child tax rebate, there was a temporary boost in aid for working poor families, an expansion of the state income tax credit that offsets local property tax bills, and the statewide freeze on car tax rates dropped from 45 to 32.46 mills (one mill raises $1 for every $1,000 of assessed property value).
Democrats noted correctly this was one of the largest tax cuts in state history and was complemented by other programs to help Connecticut recover from the coronavirus.
GOP: Democrats shared a tiny portion of state’s windfall
Republicans, who had pitched a $1.2 billion tax relief plan, argued the Democratic program fell short on several grounds.
Roughly half of the tax relief was one-time, though the GOP also included some temporary measures.
But the main Republican objection was one of context. The national inflation rate had topped 8% by May and would surpass 9% earlier this summer. And even though gas prices here have fallen since a June 14 peak of $4.98 per gallon, the $4.09 price the AAA reported Wednesday topped the national average by 15 cents per gallon.
And while economic forces were crushing consumers, Republicans countered, the tax relief Democrats offered represented a tiny fraction of the staggering, unprecedented $4.3 billion surplus state government enjoyed in the fiscal year that ended June 30.
“If it’s ‘Christmas in August,’ they’re giving the people a lump of coal,” said Senate Minority Leader Kevin Kelly, R-Stratford. The Republican plan, centered on the first income tax rate cut since 1995 and a temporary roll back of sales tax rates, was designed to bring broad-based relief that was easy to access, Kelly said.
Programs struggle to get funds out the door
Easy access has hardly been the hallmark of all Democratic programs this summer, Republicans argued.
The Essential Workers COVID-19 Assistance Program was launched in January with $34 million to help frontline workers who lost wages or incurred medical costs because of the coronavirus. But the program stalled because of a complicated application process that requires workers to assemble medical and employment data from two years ago.
Through Monday, the program — which was supposed to close on June 30 but was extended through Dec. 31 — had distributed less than 2% of its funding, only about $560,000, according to Comptroller Natalie Braswell’s office, which the legislature tasked with running the program it had designed.
Democrats trumpeted a second COVID-19 relief effort, the Premium Pay Program, when it launched two weeks ago. This was supposed to give $1,000 bonuses to private-sector front line workers. Illness or lost wages didn’t matter. It was simply a way to say thank you.
But the governor and legislature only budgeted $30 million, meaning the program could not — by simple math — provide more than 30,000 bonuses of $1,000 each.
Through Tuesday morning, the comptroller’s office had received more than 121,000 requests for applications — four times the maximum number of $1,000 bonuses that could be awarded. And the application period doesn’t close until Oct. 1.
In the event the number of approved applications exceeds demand, Lamont and legislators stipulated that grants will be reduced proportionately. To make the dollars stretch further, gasoline station workers and staff at soup kitchens and food pantries and others were not deemed essential workers.
Labor advocates warned earlier this summer that this would happen, predicting workers would get much less than the $1,000 bonus that was dangled. As evidence, they noted that Massachusetts had budgeted $500 million for a Premium Pay program aimed at private- and public-sector workers.
The child tax rebate fared better, but the program still required families to apply for relief. Some tax reform advocates said a better alternative would have been to use older tax data to identify most eligible households — and then send the aid directly without an application process.
“These programs and the poor administration of them are in keeping with the governor’s philosophy of ‘let them eat cake,’” said House Minority Leader Vincent J. Candelora, R-North Branford. “He doesn’t really care about the impact of these programs on people’s lives. He only cares about the headlines.”
“Gov. Lamont primarily is concerned about making a bunch of promises to get re-elected, and he could care less about the execution of these programs and getting money to people who need it desperately,” added Madison businessman Bob Stefanowski, the GOP gubernatorial nominee.
Democrats: GOP has lots of criticism but few ideas
But Democrats fire back that Republicans have been woefully silent when it comes to proposing specific relief efforts for those battered by the coronavirus pandemic.
And while the GOP points to its tax-relief plan as a response to pandemic pain, Democrats note the Republicans never proposed a minority budget during the last legislative session.
In other words, the GOP dangled tax cuts without explaining in detail how they would pay for them — other than to say state government could afford it easily given the surplus.
“From raising the minimum wage, to establishing paid family and medical leave, to fostering 18 straight months of job growth, to giving families cash they can use to offset back-to-school expenses, Governor Lamont’s responsible fiscal management has resulted in relief, opportunity, and justice for families across the state,” said Lamont campaign spokeswoman Onotse Omoyeni.
Stefanowski is a former chief executive officer at a payday loan company whose high-interest loans are illegal in Connecticut, and Omoyeni added that ,“While Governor Lamont continues to deliver for families across the state, Stefanowski dreams of bankrupting them.”
Chris Collibee, spokesman for Lamont’s budget office, also noted that the governor and legislature dedicated almost all of this year’s surplus, about $4.1 billion out of $4.3 billion, to paying down the massive pension debt Connecticut accumulated, mostly between 1939 and 2010.
That deposit, coupled with another $1.7 billion in surplus funds Lamont and lawmakers used to cover pension debt between 2020 and 2021, are estimated to save taxpayers $12 billion over the next 25 years.
“Make no mistake,” Collibee added, “We are making a real difference in improving the lives of Connecticut families.”