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Senate approves state budget, sending it to Gov. Lamont’s office for approval

HARTFORD — A two-year $43 billion state budget was passed by the Connecticut Senate Tuesday night, marking a departure from two consecutive years of bipartisan budgets.

During the Senate debate, Republicans accused the majority Democrats and Democratic Gov. Ned Lamont of crafting the final budget deal without GOP input, criticizing the plan for increasing taxes, spending and borrowing.

“How much better would this budget have been if we had all been able to be at the table,” said Sen. Paul Formica, of East Lyme, the top Senate Republican on the General Assembly’s Appropriations Committee.

Formica had been the Senate’s co-chair of the committee last year when Democrats and Republicans held an equal number of seats. Democrats now have a 22-14 majority in the Senate.

Democratic Sen. Cathy Osten, of Sprague, the committee’s sole Senate chair this year, insisted Tuesday the budget proposal honors the past bipartisan budgets, funding such popular initiatives as financial assistance to help certain seniors cover Medicare expenses and a planned, expanded income tax exemption for Social Security income. At the same time, she noted the budget’s rate of growth is lower than in previous bipartisan budgets; that it sets aside $2 billion in the state’s budget reserve account, an amount that’s predicted to grow to $2.6 billion; and that it restructures teacher pension payments to smooth out anticipated spikes.

“It’s the most fiscally responsible budget in Connecticut history,” Osten said. “There’s no reason why we cannot support this together.”

Republicans strongly disagreed, echoing concerns voiced by their House colleagues during Monday’s debate about how the package increases taxes by about $2 billion over two years. Roughly half of that comes from a tax on hospitals, part of tentative agreement Lamont reached with the Connecticut Hospital Association to settle a pending lawsuit against the state. The GOP argued that Democrats are repeating past fiscal mistakes that contributed to the state’s string of budget deficits. This plan covers a projected $3.7 billion gap.

“This is history repeating itself again and again,” said Republican Sen. Heather Somers of Groton. “There’s no relief, there’s no hope for working people in the state.”

While the bill doesn’t change the sales tax rate, it extends the 6.35% tax to more goods and services, including dry cleaning and laundry services, interior design services, and some parking. It also imposes a 1% tax on prepared foods and beverages, including restaurant meals; requires the state’s occupancy tax to be charged for short-term rentals, such as Airbnb; and includes a 10% increase in the excise tax on alcohol at the wholesale level, excluding beer.

It also includes a tax increase on so-called pass-through businesses, such as LLCs, partnerships or S-corps. Republicans argued Tuesday that will essentially increase the personal income taxes of owners of small businesses, from restaurants to health care practices, by 0.5% — not the wealthy as some Democrats have suggested.

“We’re not going to tax capital gains. No, we can’t do that,” said Republican Sen. Gennaro Bizarro of New Britain, referring to a proposal originally pushed by the General Assembly’s Progressive Caucus but opposed by Lamont. “But we’re going to slam the middle class. Where is the outcry?”

Democrats, meanwhile, lauded their budget plan for increasing state aid for local education; phasing out an annual $250 business entity tax; protecting state aid to cities and towns from cuts for two years; funding plans for a new paid family medical leave program and new increases in the state’s minimum wage; and including a plan for debt-free community college program in the second year.

“This legislation helps students who deserve to attend school without the burden of debt and benefits workers, employers, and our economy,” said Senate Majority Leader Bob Duff, of Norwalk.

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