Republican Gov. Bob Stefanowski on Tuesday announced a $640 million bailout that would prevent businesses from paying hundreds of millions of dollars owed to the Connecticut Unemployment Trust.
Stefanovsky’s plan would expand the tax credit for research and development, boost relief for sole proprietorships and certain other small businesses, and eliminate new taxes on restaurants and heavy commercial trucks.
But Governor Ned Lamont’s campaign countered that the plan would sap nearly $500 million from state reserves and undermine the government’s resolve to weather the next recession.
“Connecticut ranks last among the states in which we do business,” says Stefanowski. “CNBC has given Connecticut’s economy an F. Small business owners are struggling with runaway inflation.
The Madison businessman noted that Connecticut just closed its 2021-22 fiscal year on June 30 with an unprecedented $4.3 billion surplus. That’s his one-fifth of the total General Fund in the last budget.
Lamont and Congress have replaced most of that financial cushion, $4.1 billion, with the state’s massive $40 billion problem, a $40 billion problem created by decades of low savings from the late 1930s to 2010. Agreed to use the money to reduce long-term pension obligations. His remaining $200 million will increase the state’s emergency budget reserve from his $3.1 billion to $3.3 billion, keeping it at 15% of the General Fund for the new fiscal year, the maximum allowed by law. used for
But Stefanovsky said businesses, especially small ones, need help now.
The biggest element of his bailout plan is to deposit $400 million of Connecticut’s budget reserves in the state’s Unemployment Trust.
The program has borrowed about $1 billion from the federal government to cover unemployment benefits since the coronavirus pandemic first hit Connecticut in March 2020.
Connecticut has paid off much of its debt, but still owes nearly $200 million. But even after that is covered, state funds still need an additional $1.4 billion to meet federal unemployment trust solvency standards. increase. Connecticut hasn’t met this standard for years, so you can’t borrow interest-free when you run out of money.
Businesses are evaluated to replenish the unemployment fund. This will help cover the debt and bring the balance closer to the solvency threshold.
The Connecticut Business and Industry Association has repeatedly called for some of the state government’s windfall finances to be used to boost confidence and avoid rising corporate valuations over the next few years.
In addition to the single deposit to the Unemployment Trust, Stefanovsky also proposed four ongoing tax breaks to help businesses.
• Beginning January 1, eliminate new highway tolls for most heavy commercial trucks. This tax, which does not apply to baby vehicles, is expected to generate about $90 million annually.
• Repeal the 1% sales tax surcharge on restaurants and other convenience foods that Lamont and lawmakers approved in 2019. It costs consumers about $65 million annually.
• Restore the business R&D tax credit to pre-2019 levels. This saves companies approximately $28 million annually.
• And rescind state tax increases for sole proprietorships, LLCs, and certain other small businesses in 2019. In Connecticut, it costs about $53 million annually.
Stefanovsky on Tuesday renewed his challenge to Lamont and lawmakers to suspend the diesel fuel tax for the rest of the calendar year. The tax per gallon on diesel was raised from 40.1 cents to 49.2 cents on July 1st.
Jake Lewis, Lamont’s campaign spokesman, said Stefanovski did not explain in his plans how he would pay for the ongoing relief.
“Not only is Bob’s plan lacking in detail, but like most of what Bob sells, it’s also lacking in integrity,” Lewis said. “Governor Lamont saw 18 straight months of job growth, a record number of thousands of new businesses registered, and the largest tax cuts for working families in state history.”
Lamont and the Democratic majority in Congress approved a $660 million tax cut package earlier this year. But while Democrats claim it’s one of the largest in state history, Stefanovsky and other Republicans say it’s modest given national inflation, which has reached a 40-year high. I argue that it is too much.
“Now that Gov. Lamont has put Connecticut on a healthy and sustainable fiscal path, Bob Stefanovsky seems determined to put the economy back on the never-ending cycle of budget deficits and tax fraud.” added.
Stefanovsky replied that his plan would boost employment and the state’s economy.
“Given the failure of Governor Lamont to support small businesses and the 739,000 employees employed there, hundreds of thousands of dollars from the taxes he collected are hurting Connecticut’s economy and entrepreneurs. It’s no surprise that he’s unhappy that my plan starts with cutting $10,000,” Stefanowski said. He said. All taxes that we give back to small business owners are reinvested here to help build strong and healthy local economies.