End of Session Wrap-up
Connecticut’s 2023 legislative session came to a close on June 7th at midnight. It was a long session that produced a two-year, $51 billion state budget that passed both chambers with bipartisan support and was signed by the governor. The package, which spends $25.1 billion next fiscal year and $26 billion in 2024-25, boosts spending by almost 4% each year, which exceeds what Governor Lamont initially proposed. While it narrowly falls under the state’s self-imposed spending cap each year, it carries forward $340 million from this fiscal year’s $3 billion surplus to spend in the coming biennium. The plan lowers the 5% marginal income tax rate to 4.5% and the 3% rate to 2% for the income tax year 2024. It also increases the income tax credit for low-income working families and freezes scheduled increases in the state diesel tax.
New Budget Takes Effect July 1
The budget included several provisions of interest to LDAC members. Starting in 2024 it makes the pass-through entity tax (PE) optional and changes the method for calculating the tax base.
The budget also changes the HUT Filing Requirements. Those subject to the tax will have to file returns and submit payments quarterly, rather than monthly, beginning in the 4th quarter of 2023. Although we were unable to repeal this tax, data is being collected to see if a legal challenge can be brought, similar to RI, to have the law struck down by the courts.
Affordable Housing
Affordable Housing was a huge topic of debate this session. The budget provides for 600 units to be established through grants in the CT Housing Trust Fund as well as in the CT Housing Investment Fund. The investment amounting to $810 million is really a drop in the bucket in terms of adequately solving the housing crisis in CT, but substantial reforms could not be agreed upon. This is an important issue for House Majority Leader, Jason Rojas, and it will be front and center in the 2024 legislative session.
Blue Dog Caucus Protects Business Interests
There were a number of anti-business bills that failed due in large part to the Blue Dog, or moderate caucus. This group of 25-27 moderate democrats banded together and really held firm, forcing the progressives and unions to abandon proposals, as the votes necessary for passage could not be garnered. Several of the measures such as Expanding Paid Sick Days, will be back next year and has the support of the Speaker of the House, President of the Senate, as well as the Governor. The bill is considered a national model and it expands paid sick days law to cover all private-sector employers and employees and broadens the range of family members employees may use leave for. It also increases the maximum number of hours, from forty hours to eighty hours, an employee may accrue. It will be difficult to kill this measure next year without the continued support of the Blue Dog Caucus.
Other bills that failed include Amending Connecticut Paid Family Medical Leave, Disclosure of Salary Ranges on Public and Internal Job Postings, Predictable Scheduling, and Zero Carbon Emissions.