Wasserman Votes Against State Deficit Reduction Plan

State Representative Julia B. Wasserman opposed the deficit mitigation plan approved by the General Assembly and signed into law by Governor John G. Rowland last week because it relied too much on tax increases and not enough on reductions in state spending and negotiated contract concessions with state employee unions.

“I was concerned about the effect the increases in the state income tax would have on middle income taxpayers and the impact the new taxes on businesses and real estate transfers would have on the economy, and that is why I voted against this legislation,” said Rep Wasserman, R-Newtown.

The measure approved Wednesday increases the income tax rate on the upper bracket of the income tax from 4.5 percent to 5 percent. It will affect those with Connecticut adjusted gross incomes of more than $44,000 for joint filers, $22,500 for single filers, $20,000 for married people filing separately, and $35,000 for heads of households. It also extends the six percent sales tax to formerly tax-exempt health and athletic club services and newspaper and magazine subscriptions, and imposes a three percent sales and use tax on advertising services for developing media and direct mail advertising, Rep Wasserman said.

 “Although this plan is not as harmful as the earlier one vetoed by the governor, it will still be difficult for the people of Connecticut and for our state’s economic future. It could slow down or halt the economic recovery and even bring on a recession. It was my hope that we could have considered another proposal that would have eliminated this year’s projected deficit without hurting our still fragile economic recovery nor burdening Connecticut’s taxpayers and employers with major tax increases,” Rep Wasserman said.

In addition to the income and sales tax increases, other important features of the deficit mitigation plan include:

Taxes

*The cigarette tax is increased by 40 cents per pack, from $1.11 to $1.51 per pack of 20, beginning March 15, 2003.

*The sales tax exemption for clothing and footwear is changed. Currently, the exemption applies to items costing less than $75. As of April 1, 2003, the exemption is reduced to items costing less than $50.

*A 20 percent business tax surcharge is imposed on the corporation tax and on the annual $250 tax on limited liability companies (LLCs), limited liability partnerships (LLPs), limited partnerships (LPs) and S Corporations for the income tax year 2003.

*From March 15, 2003, to June 30, 2004, the municipal portion of the real estate conveyance tax is increased. The municipal tax rate is increased from .11 percent of the sale price to .25 percent. The increase applies only from March 15, 2003, through June 30, 2004. Unimproved land or property sold for $2,000 or less is exempt.

*Tax rates for wine, beer, and liquor are not increased.

 

Newtown’s Annual State Grants

*Pequot Fund Grant reduced from $726,049 to $573,445 for a total reduction of $152,604.

*Town Aid Road Grant reduced from $184,611 to $117,883, for a total reduction of $66,728.

*Public School Transportation Grant reduced from $186,785 to $177,446 for a total reduction of $9,339.

*Nonpublic School Transportation Grant reduced from $17,144 to $16,287 for a total reduction of $857.

*Manufacturing Inventory Grant reduced from $586,327 to $458,915 for a total reduction of $127,412.

*Payment in Lieu of Taxes Grant for state-owned property in Newtown remains unchanged at $1,803,986.

*Local Capital Improvement Project Grant remains the same at $197,620.

*Adult Education Grant remains the same at $2,842.

*Education Cost Sharing Grant remains the same at $3,803,077.

Human Services

ConnPACE Prescription Drug program for the elderly:

*Reduced pharmacy dispensing fees from $3.85 to $3.60.

*Increased co-payment from $12 to $16.25 for all participants.

*Increased annual application fee from $25 to $30.

Temporary Aid for Needy Families:

*Reduces the number of extensions that can be granted after the 21-month eligibility period ends from three extensions to two.

HUSKY (Healthcare for UninSured Kids and Youth) Plan:

*Parents with incomes between 100 and 150 percent of the federal poverty level are no longer eligible for the program. About 23,000 participants are affected, saving about $12 million in Fiscal Year 2003 and $54 million in Fiscal Year 2004.

*Parents with incomes less than 100 percent of the federal poverty level are not affected. About 70,000 people fall into this category.

State Employee Concessions:

*An early retirement incentive program is expected to save the general fund $36.9 million in the 2003 fiscal year.

*The deficit mitigation plan also assumes $94 million in union concessions still to be negotiated.