Connecticut residents earning less than $200,000 annually may get a $55 tax refund due to the state’s budget surplus.
Gov. Dannel P. Malloy has proposed what he calls a “sales and gas tax refund” for Connecticut taxpayers, including individuals who receive Social Security income and do not file taxes.
The refund would return $55 to individuals earning less than $200,000, and $110 to joint filers earning less than $400,000.
The refund would cost the state $155 million, representing slightly less than one-third of the state’s projected surplus of $505 for ongoing fiscal year 2013-14.
“Connecticut has faced more than its share of challenges over the last few years,” Malloy said. “Now that things are beginning to improve, it’s critical that everyone shares in the recovery.”
Seeking re-election this fall
Malloy, a Democrat, is expected to seek re-election this fall. Republicans have criticized him for pushing through what has been described as the biggest tax increase in state history during his first year in office.
Today, at noon, Malloy will give the State of the State address to begin this year’s session of the state Legislature. In his speech, the governor is expected to detail his priorities for the coming year, including on spending priorities and taxes.
Malloy has said he wants to exempt 50% of teachers’ pension payments from the state income tax (cost is about $23 million a year), and exempt non-prescription drugs from the sales tax (cost is about $17 million a year).
‘A modest, responsible way’
“The package I am proposing is not a panacea, but rather a modest, responsible way to begin reducing the tax burden on Connecticut residents,” Malloy said.
“It’s my belief that as our economy continues to recover, it can and should be the first step toward larger relief over the long-term,” he said.
Funds to rainy day fund, pensions
Malloy also plans to use the projected surplus to put $250 million in the rainy day fund, increasing the balance of this account — officially called “the budget reserve” — to $520 million. Three years ago, the state’s rainy day fund had been depleted, according to Malloy.
Under Malloy’s plan, $100 million from the projected surplus would be used to make an additional payment toward the state’s pension fund, helping to pay down long-term debt.
The governor plans to introduce legislation in the coming session that would mandate future surpluses be used exclusively to bolster the rainy day fund, pay down long-term debt, and provide tax relief.