Gov. Dannel Malloy presented the first budget of his term Wednesday, and it involves increases in spending and taxes while maintaining nearly every state job.
“I want to take you on a road less traveled,” Malloy said. “One that I believe will make all the difference.”
The overall proposal increases the budget from $19.3 billion to $19.7 billion, which will be paid for through a variety of tax increases. The spending increase is largely based on infrastructure investments as the state’s operational costs stay flat, Malloy said.
The governor has asked all state employees for a wage freeze and three furlough days over the next three years, which would save the state $2 billion. If the unions do not agree to the wage freezes and furloughs, there will be layoffs, Malloy said.
“The alternative to the $2 billion figure would require us to completely shred the safety net and lay off thousands of state workers,” Malloy said. “Which is to say there’s no alternative. We have to get it done. And I’m confident we will get it done.”
Currently, there are about 45,000 full-time state employees. This budget, if the unions agree to concessions, will reduce that number by 150.
What It Means To Waterford
The budget raises the state income tax, the state sales tax, removes several tax exemptions, and raises the gasoline tax and the tax on cigarettes.
The gasoline tax will go up 3 cents per gallon, to 28 cents per gallon. The tax is unfair, Waterford resident Donna VanEyk said.
"I think everything is being taxed too much," VanEyk said. “Taxing gas is like choking you. Gas is a necessity."
The sales tax will increase from 6 percent to 6.35 percent (6.25 percent for retail sales). It will also have fewer exemptions, meaning services such as haircuts and manicures will be taxable.
The sales tax exemption on clothes and shoes $50 or less will also be removed. Exemptions on boating, such as docking or storage, will also be removed.
Along with the additional state taxes, the governor proposed adding taxes that towns could collect as well. Towns could now collect a higher conveyance tax on property transfers and a hotel tax, according to Malloy’s proposal.
The higher hotel tax is wrong, said Gail Googins, owner of Oakdell Motel in Waterford. Currently, there is a 12 percent sales tax on hotel rooms, and that would increase with this new proposal.
“We are barely making it as it is,” Googins said. “They are going to drive people away from Connecticut.”
The government likes to tax hotels because usually out-of-state people pay the tax and they don’t have a vote, Googins said. But those people come in and spend money in many different Connecticut businesses and helps drive industry, she said.
“People are coming in, spending money on gas, on shopping, on food,” Googins said. “They create jobs.”
Town Officials Reaction
The budget was going to be tough this year, with the state facing a deficit of more than $3 billion, First Selectman Dan Steward said. One good thing about the budget is it does not cut municipal aid, which only increases property taxes, he said.
Steward did worry about the tax increases, though, especially to small businesses.
“Most small businesses get by on a very small margin,” he said. “This is going to make it harder for them.”
The hotel tax, although a source of revenue for the town, could ultimately be a bad thing, he said.
“The tax will make hotel rooms more expensive,” Steward said. “Will that limit the number of people who come? I don’t know.”
Just like municipal aid was not cut, funding for schools also was not cut.
“That is a good thing,” Assistant Superintendent Craig Powers said.
Waterford receives $1.21 million from the state for education, far less than towns such as New London, Powers said. A cut of state funding would have far less effect on Waterford than other towns that receive tens of millions of dollars, he said.
Malloy pushed for universal preschool, an initiative he accomplished as mayor of Stamford. Waterford currently has the Friendship School, which offers preschool.
Right now, 140 Waterford preschoolers attend the school. More applications are received than spots are available, so a lottery is necessary to pick the students, Powers said.
Preschool is beneficial, as teachers see an improvement in students who attend the Friendship School. However funding it is another issue, he said.
“I just don’t know if that is possible right now,” Powers said.
The proposal is now in the hands of the Connecticut General Assembly.
Patch Groton Local Editor Deborah Straszheim contributed to this report.