The Nutmeg State is in search of revenue.
Gov. Ned Lamont wants to end Connecticut’s cycle of budget deficits, deliver property-tax relief and amass a fiscal bulwark against the next recession. But to do it, he may push wary legislators to extend the sales tax for the first time to groceries, medications and other long-exempt items.
Lamont pledged during the 2018 campaign that he would not raise the income tax or empty the state’s budget reserves to close a shortfall of $1.5 billion projected for the coming fiscal year, saying neither of those measures would bring fiscal stability to a state that has struggled to balance its budget in every year but one from 2007 to 2017.
While removing these exemptions could generate hundreds of millions more a year for the state’s coffers, Lamont would find it extremely difficult to sell lawmakers on the idea of taxing bread, milk, and medicine — even with the lofty goal of fiscal stability.
“In order to build a better budget — one that will attempt to provide the much-needed stability for economic growth through the next two years and through the next decade — we need to explore new and different options,” said Chris McClure, spokesman for the governor’s budget office. “This means leaving no stone unturned, and engaging in all necessary conversations so we can evaluate and analyze ways to achieve and retain balance.”
The new governor’s first budget proposal isn’t due to legislators for another month. But his administration has been researching options to broaden the sales tax base and reduce the 6.35 percent rate across-the-board, a variation on a post-election recommendation made by the Commission on Fiscal Stability and Economic Competitiveness. The study group called for an end to most exemptions, but only a two-percent tax on groceries.
Winning approval of a measure extending the state’s sales tax to groceries and other exempt items mostly likely would turn on the ability of the new and untested administration to frame Lamont’s first budget as the necessary first step toward ending the state’s chronic budget shortfalls.
Expanding the sales tax would not break any campaign promise made by Lamont, but it would draw Democratic legislators, few of whom have close relationships with the new governor, into an uncomfortable debate about a tax that would be felt most deeply in the homes of the working poor and middle class.