Sales Tax hike out, Restaurant, Real Estate tax still in budget plan

State lawmakers meet at the Capitol. (WTNH)

HARTFORD, Conn. (WTNH) — Saying they will push ahead for a vote on a state budget plan this Thursday, Democratic leaders at the Capitol say they have reworked their plan and will not raise the Sales Tax.

The leaders say they desperately want to avoid the catastrophic local aid cuts that will go into effect on October 1st, and are crafting a deal that the Governor will sign.

A hike in the general Sales Tax was apparently too much for many Democratic lawmakers, so that idea is dead and the rush is on to find money elsewhere.

“We’ve taken the Sales Tax off the table and we’re looking at alternatives and going through additional cuts and efficiencies to see if we can come up with a deal that works for everybody,” said Speaker of the House Rep. Joe Aresimowicz (D-Berlin) in a News 8 interview today.

While an across the board hike in the general Sales Tax is now dead, the new ‘Restaurant Tax‘ is not. Democratic lawmakers are still debating whether there should be an up to one percent local option increase, or go with Governor Malloy’s idea to tax all restaurant meals across the state at a full 7%.

The other tax hike that is still on the table is the Real Estate Conveyance Tax. That’s the sales tax on the sale of homes and condos.  “It’s a somewhat more progressive approach because it generates more revenue for highly valuable homes that are sold,” said Sen. Martin Looney (D-New Haven), the Senate President Pro tem.

Another revenue source is a complicated scheme that would increase Medicaid rates to state hospitals in exchange for a higher hospital tax. This was part of the compromise the Governor proposed last week.

Added Looney,  “On balance there’s significant benefit for the hospitals in that as well as for the state as well as the settlement of the lawsuits that are pending, so I think that’s a deal that should go forward.”

Republicans, who say they are being left out of these final discussions, say that these solutions will only extend the state’s financial problems. Rep. Themis Klarides (R-Derby) the House Minority Leader saying, “They want to fix this for this week, for next month, for next year. They do not want to fix this problem that has been spiraling.”

The Republican Senate President Pro tem, Sen. Len Fasano (R-North Haven) said, “All they want to do is do that same policy that has driven this state into the ground.”

Klarides added this comparison, “This might as well be ‘Irma,’ I have more confidence on where ‘Irma’ is going than where the state’s going based on the destruction they’ve left in their wake.”

Making this work will involve more negotiation with the Governor over the next 24 hours in order for a bill to be ready by Thursday. Republicans say they plan to bring up their “no tax increase” budget plan as well.

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