Face the Facts: Budget Negotiations Could Include a New Child Tax Credit

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Following the release of a report this week that revealed Connecticut’s budget surplus shattered historical records, lawmakers now agree it’s time to put some money back in your pocket through tax breaks.

However, determining how is where the two parties disagree.

“What we’re doing is taking the overcollection of sales and use tax and gross receipts tax that we didn’t anticipate and returning it to the taxpayers. We received it, and the state received it as a result of inflation. And all we’re doing is giving it back to the taxpayers. As a result, it has no effect on the budget. In that sense, it is budget neutral. The budget is balanced and in fact in surplus, so it is fiscally responsible “Senator Kevin Kelly stated (R-21st district).

 

child tax credit

 

Republicans are now discussing possible income tax breaks for people earning less than $75,000, extending the gas tax holiday, eliminating the restaurant meals tax, and a variety of other proposals.

 

The Democrats have their own strategy as well.

On the subject, NBC Connecticut’s Mike Hydeck spoke with House Speaker Matt Ritter (D-Hartford). Ritter is at the forefront of budget negotiations.

Michael Hydeck: “So let us begin with Republican Senate Minority Leader Kevin Kelly’s remarks. He claims that their $1.2 billion aid package is budget neutral. Is that correct, in your opinion?”

Matt Ritter (actor): “That isn’t even the most important point to me; it’s illegal. That is the most serious issue. As a result, I would support many of the tax cuts they proposed. The issue is that, due to federal government rules governing states that received ARPA funding, Connecticut is limited to cutting $400 million in taxes for fiscal year 2023, which begins on July 1. We expected the figure to be $180 million, but given the revenue figures alluded to in the earlier clip you played, that figure has risen from $180 million to $400 million. As a result, beginning July 1, 2022, the legislature can reduce taxes by $400 million. That is what we intend to do. $1.2 billion would be a violation of federal law. And you might be required to repay the federal grants we received. As a result, their proposal was unlawful under federal law.”

Michael Hydeck: “What is your party’s top priority in terms of tax relief? Would you say it was a property tax, a gas tax, or a car tax?”

Matt Ritter (actor): “They’re all a part of it, aren’t they? So those are the three items you mentioned. And those will be reflected in the budget. The one we are most concerned about is the continuation of the child tax credit, which has been implemented by the federal government in recent years. And given the new news that literally just broke in the last 24 hours that we can now increase our tax cuts from $180 million to closer to $400 million, I think you’ll see a very strong push from Democrats and Republicans to include a child tax credit in the upcoming budget, which should be around $250 per family per child, up to three kids, and of course, means tested based on income limits, which will help a lot of middle-class families with children. As a result, I believe you’ll see a lot of price cuts. If you own a car, a child, or a piece of real estate, you will benefit from tax breaks.”

“How and why did it change from 180 to 400?” asks Mike Hydeck.

Matt Ritter (actor): “You have a lot more money that has come in. So it’s a formula, isn’t it? As a result, when they were able to do so, we did not anticipate seeing another billion dollars in new additional revenue and surplus funds. As a result, we were able to increase it; it’s some sort of ratio that OPM must calculate. That’s where the cash came in.”

Michael Hydeck: “So one thing you seem to disagree with – and we’ll return to the child tax credit – is that you want it to happen sooner rather than later. The governor is of a different mind. How do you find a happy medium?”

Matt Ritter (actor): “The governor, on the other hand, was adamant about a property tax credit, which we prioritized. He had specified items in his budget that he desired. So it’s all a discussion. I believe the governor had more reservations, but I cannot speak for him. When we thought we were capped at $180 million, we would have been unable to afford that under the ARPA calculation a week ago. I believe, and hope, that he will be more open to the idea now that we have a little more breathing room as a result of the new revenue estimates we’ve received.”

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Michael Hydeck: “You just mentioned it. Because of the literally exponential difference between what we expected to have in state coffers and what we actually have, billions more than expected, will this debate be resolved later in this session, because we have very little time left? And what happens if it doesn’t?”

Matt Ritter (actor): “Yeah, I like to move at a rate of eight miles per minute. So, believe me, I get frustrated at times with how these things are slowed down. But you can see why you can’t finalize a budget until you have the final revenue figures, can’t you? If we had voted a week ago, we would have said, ‘Oh, boy, that’s a lot more than we expected.’ As a result, we must be patient and adhere to the calendar established by statute for the submission of these reports. But, yes, we will finish it. I believe we’ll reach an agreement on Monday, and that the budget will be bipartisan. I truly believe it. I’m not sure how you can vote against some of the things we’re doing in terms of tax cuts. So, when all is said and done, I believe Republicans and Democrats both voted yes on what is essentially a budget adjustment in year two, rather than a new budget.”

ALSO READ:

Connecticut’s Budget Agreement Includes a $600 Million Tax Cut and Extends the State’s Gas Tax Holiday.

It Will Hold a Hearing on the IRS’s Underfunding and Operational Issues.

Have You Still Not Received Your Tax Refund? How to Keep Track of Your Money

“So you don’t see a special session coming up or pushing things to the next session?” Mike Hydeck asks.

Matt Ritter: “I anticipate returning to work and coaching my son’s baseball team this summer, not being in special session, correct?”

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