Governor Malloy announces FY19 budget adjustment proposal

HARTFORD -- Democratic Gov. Dannel P. Malloy's final budget proposal includes a range of tax changes, including a higher levy on cigarettes, a 25-cent-per-bottle deposit on wine and liquor and elimination of the $200 property tax credit against the income tax.

Those propositions are in addition to the gradual 7-cent-per-gallon gas tax increase and statewide tolling Malloy proposed last week.

Malloy's budget does not increase the state's income or sales tax. However, it repeals the sales tax exemption for nonprescription drugs.

Malloy unveiled details of his budget on Monday, two days before the legislative session begins.

The governor's plan includes proposals to help cushion the impact of the federal tax bill's elimination of state and local tax deductions. There are also spending cuts, including elimination of some grants to wealthy communities.

The Governor’s adjustment proposal claims to :

Include expenditure and revenue changes totaling more than $266.3 million. These changes are responsive to the underlying $165 million shortfall identified by the latest consensus revenue forecast, and an additional $100 million of changes to correct unrealistic spending assumptions in the adopted budget or for unrecognized needs.

Reduce projected out-year deficits by half; decreasing by $1.35 billion in FY20, $1.43 billion in FY21, and $1.49 billion in FY22.

Take steps to ensure the long-term solvency of the Special Transportation Fund and restoration of billions of dollars in transportation projects currently deferred.

Pay the entire State Employees Retirement System (SERS) and Teachers Retirement System (TRS) state contribution and proposes changes to smooth the looming TRS payment spikes. Major tax rates are unchanged, but revenue changes include repeals of exemptions and credits or cessation of enacted rate changes.

Establishe a series of new steps to allow Connecticut’s citizens to receive more friendly tax treatment following the federal tax changes, including changes to pass-through entities, decoupling expensing and bonus depreciation, and allowing municipalities to create charitable organizations supporting local interests.

Annualize FY18 budgeted lapses but preserves funding for Alliance Districts and towns most in need by reducing grants in wealthier communities.

Fully fund Juan F. compliance costs.

Increase funding to address the emergency placements within the Department of Developmental Services system, thereby alleviating pressure on the wait list.

Add additional temporary supports for those displaced by Hurricane Maria.

Reduce the assessment on the insurance industry by 3.7 percent.